Ahead of the India-EU summit in February, the commerce ministry is set to approach the Prime Minister?s Trade and Economic Relations Committee (TERC), asking for direction to finalise the contours of the proposed bilateral trade and investment agreement with the European Union.
As of now, the pact envisages slashing of duties on over 90% of the goods traded and opening up of mutual markets for services and investment.
There have been 13 rounds of negotiations between the two sides, but there are many outstanding issues.
According to the official sources, the review is necessitated partly because Parliament has been unable to pass the insurance Bill, which envisages hiking foreign direct investment limit in insurance, and also due to delay over the opening up of retail sector to FDI. The EU has been consistent in demanding that India open up its services sector, including foreign direct investment in retail, banking and other financial services.
It was earlier in April last year when the TERC had reviewed the progress of the negotiations over the India- EU BTIA.
On being asked how close the negotiations are and where are they stuck apart from insurance services, the official added that the talks are at a final stage and the February summit is expected to bring some kind of finality to the same.
The official said that various negotiations on goods and non-industrial goods have already been settled but areas like wines and spirits, agriculture and automobiles are yet to be negotiated on.
?We are expecting some settlement soon and before the summit we will be going to the TERC for a review in the mandate which will help in closing the deal,? the official said.
New Delhi is also hopeful that negotiations on sectors like agriculture would be over by the next week, whereas on automobiles, the official said that the ministry is working out a formula which would impose caps on the number of vehicles to be imported and keep the exchange rates in consideration.
The EU wants India to eliminate or reduce tariff on completely built units (CBUs)and completely knocked down units (CKDs) in passenger cars. The Indian negotiators are resisting the demand to protect the domestic industry.
If the EU demand is considered, import duty on CBUs will significantly be lowered from over 100% that is getting it down to 30% from current 60%.
The commerce ministry is also expecting that if the negotiations are successfully closed then both the sides may announce a deal by February 10 at the summit.
However, the deal can come into force only once a legal pact is signed between the two parties and is passed by the cabinets or the parliaments of both the sides. Usually, this process takes 3-6 months, the official said.
Interestingly, the negotiations for BTIA are on since June 2007. The pact is aimed at freeing vast markets of about two billion people to mutual advantage.
The 27-nation bloc has also been pressing India to agree for a intellectual property rights regime over and above what the country has agreed multilaterally in the World Trade Organisation (WTO).
The two-way commerce between India and EU stood at $75 billion in 2009-10.
