‘Free trade pact with EU unlikely in next 3-4 years’

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SummaryThink tank says EU not happy with India’s offer on insurance, may wait for election results

India and the European Union are unlikely to ink a free trade pact in the next three to four years, a Belgium-based independent think tank has said.

"It's (conclusion of the India-EU free trade pact) not likely to happen in the next three to four years," the European Centre for International Political Economy (ECIPE) director Fredrik Erixon said.

Echoing similar views, a European Union Parliament member said, "It all depends on whether the Indian Parliament gets to pass the Insurance Bill in the winter session. Otherwise, it could take another three years before the two get another opportunity to conclude a deal as both sides face elections next year."

The Insurance Laws (Amendment) Bill 2008, which seeks to raise the foreign direct investment (FDI) cap in the sector from 26% to 49%, is much awaited by global investors but has been pending for long in Parliament.

The Bill is unlikely to be approved by Parliament due to lack of consensus among political parties.

The India-EU bilateral trade talk, formally known as the Broad-based Trade and Investment Agreement (BTIA), is stuck as the EU is not satisfied with India's offers in insurance, government purchases and market access for automobiles and wines and spirits. The EU will undergo a leadership change in May.

Ignacio Garcia Bercero, the EU chief negotiator with India on the accord, has moved on to handle trade talks with the US.

Both India and the 28-nation bloc agree that the BTIA will give a major fillip to the two-way trade as well as bolster the bilateral strategic partnership. Launched in June 2007, the negotiations for the proposed BTIA between India and the EU has witnessed many hurdles.

The EU side has been pressing for hiking FDI cap to 49% in the insurance sector. India has expressed its inability to do so without an approval from Parliament.

Besides demanding a significant cut in the duty on automobiles, the EU is also demanding tax reduction on wines and spirits and dairy products and a stronger intellectual property regime.

On the other hand, India is wants to be granted “data secure nation” status by the EU. The matter is crucial as it will have a bearing on Indian IT companies wanting market access.

It also wants liberalised visa norms for its professionals and market access in services and pharmaceuticals sector.

Finance minister P Chidambaram had met Bharatiya Janata Party (BJP) leaders Sushma Swaraj and Arun Jaitley last week to seek support for the

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