The European Union’s trade negotiators suffered a few tense moments before the Greek poll results, worrying not just about the fate of the region’s unity, but also the future of their most ambitious free trade agreement — with India.
Incidentally, the pro-bailout parties in Greece secured victory in the polls by a thin margin, brightening the prospects of Euro zone unity.
Official sources said the Indian side was also concerned about the impact of the Greek polls’ outcome on the EU-India FTA considering the hard work they had put in to take the trade pact talks to such an advanced stage.
Huge relief
Significantly, the relief given by the Greece election results comes days ahead of the India-EU FTA talks slated for June 26 at Brussels.
India is keenly watching the developments in the EU not only due to the FTA, but also because the EU is a major export destination, with the region accounting for nearly a fifth of India’s total exports.
“One immediate threat (Greece’s exit from the Euro zone followed by a few others such as Spain) is gone and it is a good thing. Once Greece sorts out its problems, the EU will do more on monetary unification and a greater banking union. We can look forward to greater consolidation in their banking system as the European Central Bank gets more teeth,” the sources said.
A stable banking system in the EU will, in turn, provide the required comfort for Indian exporters, they explained.
RETAIL TRADE
Meanwhile, India is readying itself to accept one of the key demands of the EU to be part of the FTA — greater market access in the Indian retail sector.
Of course, Indian companies will also have equal access to the EU retail sector as the move will be reciprocal.
Official sources said the Government would push ahead with the opening up of multi-brand retail trade for foreign investment after the Presidential polls (or after the Parliament session following the Presidential polls) with a rider that it will not be applicable in those States that have objected to the same.
Though the Central Government can create the enabling facility by allowing FDI in retail trade, it is up to the States to take a call on giving trade licences.
The FTA talks began in June 2007 and are expected to be completed by year-end.