With the India-European Union broad-based Bilateral Trade and Investment Agreement (BTIA) negotiations entering the final lap, New Delhi is pushing hard for greater market access for services, especially the easier movement of its service-providers, outsourcing and commercial presence, mainly in information technology-related services.
This is apart from seeking greater market access for its merchandise goods such as textiles and some farm products in the EU. In return, India would give the EU a larger play in goods such as auto (mostly luxury vehicles) and wine, and for banking and retail in the services category.
In the services sector, India essentially wants the EU to do away with the restrictive economic needs test (ENT) to facilitate the easier movement of Indian professionals, official sources told
Under the ENT (seen as a barrier), foreign companies or service providers have to prove that by providing higher value and superior choice to their clients, they are not weakening their local EU counterparts. Also, EU-member countries can cite the ENT and the domestic availability of service providers to deny entry to foreign skilled professionals who, in turn, find it tough to prove that his or her services are needed in the concerned EU nation.
This not only enhances costs and time for Indian companies in terms of more applications, but could also lead to arbitrary orders by the EU nations. Therefore, for India, replacing the ENT with a liberal quota regime is important to ensure the uncomplicated temporary entry of service providers into the EU, the sources said.
Incidentally, Malaysia has removed the ENT regime exclusively for India under a bilateral trade pact, and New Delhi has cited this before the EU. Currently, discussions are on with the EU to fine-tune the size of the cap/quota and that too sector-wise.
Initially, in the BTIA, there could be a specific quota/cap on the number of service-providers who will be allowed entry. But that could be relaxed (as and when the BTIA is reviewed) similar to the case of the US visa regime, depending on the requirement.
“India is a young country as against Europe where many countries have an ageing population. Though there is a fear of a backlash against migrants and its political consequences, they will have to take into account the economic realities and increase the cap on the number of service providers who will be given temporary entry,” the sources said.
The sources added the final outcome could be greater market access for Indian contractual service suppliers and independent professionals. Those who would benefit would include IT, ITeS, telecom professionals, engineers, designers, accountants and specialists in health, R&D services and construction, management consultants, tourism and market research professionals, besides data-entry operators in the subsidiary services of the financial sector.
India also wants greater access for commercial presence (setting up offices) in Europe, especially in IT-related services, where there is now a greater outflow of investment as well from India to Europe since many services have an IT element. In this regard, there were discussions on getting EU to simplify its administrative and legal formalities. The EU is principally looking at a commercial presence in India in sectors such as banking and retail and relaxation of India's norms (including FDI).
On labour and the environment, India will not give away anything as it will only go for a mere mention of its current stand in the BTIA on those issues. Such a mention is to please the respective Parliaments of the EU countries, who, otherwise may not ratify the BTIA.
To help bring down the cost of Indian exports in complying with stringent European standards on food safety as well as plant and animal health, India has asked the EU to recognise some Indian labs, simplify the EU's procedures and also increase the compliance time.
Though officials are trying their best to come to an understanding on the BTIA by the India-EU Summit in February 2012, there are still many loose ends to be tied, the sources said.