India and the European Union will likely resume free trade agreement (FTA) negotiations in June, with New Delhi expressing willingness to accommodate the EU’s demands for lower duties on wines, spirits and automobiles, provided Brussels relents to grant India ‘data secure nation’ status besides facilitating easier movement of skilled Indian professionals in Europe.
PM Narendra Modi, official sources told FE, has asked the commerce ministry – the nodal government body for FTA talks – to take a “positive” stand, instead of the earlier ‘defensive approach’ that had stalled the talks since May 2013.
Modi wants the ministry to “gauge the EU’s response” needed for a successful conclusion of the negotiations (formally known as India-EU broad-based Bilateral Trade and Investment Agreement) as early as possible.
The FTA talks, to remove barriers to trade in goods and services and investment, began in June 2007 and 15 rounds of negotiations have been held so far.
The commerce ministry recently asked the EU to get back with a date in June to
resume talks either at the commerce secretary-level or commerce minister-level, the sources said.
The ministry has informed the EU of the recent reform measures taken by the Modi government in segments of their interest. This includes easing foreign investment ceilings and norms in insurance, defence, railways, construction and medical devices, besides a banking reforms agenda.
It also cited the Centre’s ‘open mind’ to make public procurement transparent and allowing greater access to foreign players as well as getting parliamentary approval for the Public Procurement Bill.
But India will push for relaxation of EU’s public procurement laws that automatically ‘favour’ European companies and eliminate competition from Indian firms, with provisions stipulating several years of experience in EU.
On Intellectual Property Rights (IPRs), the ministry has said the government will soon release a National IPR Policy to strengthen its IPR laws for ensuring greater protection in turn incentivising innovation and R&D.
In automobile and auto-components, the ministry, despite opposition from local industry bodies, is willing to reduce duties on certain high-tech components (eg: automotive microchips, which are difficult to make in India) to enable easier import and transfer of technology and at the same time protecting the components that can easily be made in India, the sources said. The EU, of course, wants duties on automobiles to be eliminated gradually from the current levels of 80-130%.
In the long run, the government’s strategy is to make raw materials and intermediaries available locally at the lowest cost to ensure finished products from India are not out-priced by competitors abroad.
In return, India is keen on getting the ‘data secure nation’ tag because without it, Indian IT firms are finding it difficult to do business with European firms.
On easier movement of skilled professionals, India wants the EU to agree to ensuring greater flexibility
of movement of these persons within the EU, in addition accepting a greater number of such persons, longer duration of stay, and wider sector definitions that enables them to avail opportunities in newer segments within a sector.