India has offered to meet the EU half-way in getting the negotiations on the long-pending free trade agreement re-started.
It has proposed to set up a working group on automobiles that would exclusively focus on meeting the 28-member bloc’s aggressive interests in the sector, but has refused to take commitments on duty cuts before the talks begin.
“The ball is now in the EU’s court. It has to decide whether our offer, made in Brussels last month at the Secretary-level talks, is good enough for it to re-engage with us, or if it wants to keep insisting on duty cut commitments as a pre-condition to talks” a government official told
An announcement at the India-EU Summit on the re-launch of the talks, officially called the Broad-based Trade and Investment Agreement (BTIA), depends on how early the EU takes a call on the matter, the official added. The BTIA seeks to reduce tariffs in goods and liberalise rules in services and investments.
The EU wants India to commit to sharp cuts in import duties on automobiles currently ranging between 60 per cent and 120 per cent, as opposed to 10 per cent duties levied by the bloc.
Auto focusAutomobiles have been a focus sector for the EU right from the beginning of the BTIA talks in 2007. The EU lost interest in the negotiations in 2013, which were then suspended, as it was disappointed with the market openings offered in the automobiles and wines & spirits sectors and also in services such as banking, insurance and retail.
“It is the EU which expressed interest in re-starting the talks last year. We are now in a position to offer more in several areas due to autonomous changes in our policies, but it is difficult to proceed if tough pre-conditions are placed,” the official said.
The domestic automobile industry has been lobbying against reduction of import duties on cars as it argues that it will be a reversal of the country’s policy of high tariffs to encourage investment, local manufacturing, local value addition and local employment.
“The working group that we have proposed to set up with the EU will focus on meeting the EU’s demands while keeping domestic realities and needs in mind,” the official said.
Curbs on workersIndia, on its part, would want the EU to commit to not just giving more work visas to Indians, but also ensure that additional barriers to movement of workers don’t crop up.
“The increased restrictions on foreign workers, in the form of minimum salary requirement and higher fees, being planned by the UK is of great concern to us, and we want the BTIA to address these,” the official said.
Two-way trade between India and the EU is well balanced at about $100 billion annually. Exports to the EU account for about 16 per cent of India’s total exports.