India fears the European Union (EU) might ask for more clarity on the country?s policies on FDI in the retail, aviation and insurance sectors before the India-EU talks could be concluded. Both these are politically sensitive issues where the government is unsure as to when and how the proposed liberalisation could be implemented. New Delhi is also clear that it can?t give any further concessions on the tariff reduction formula, on which a broad agreement has already been reached between the two sides.
While a cabinet decision to allow FDI in multi-brand retail has been put in abeyance for lack of consensus in the ruling coalition, the insurance Bill that seeks to hike the FDI limit in the sector is pending with the cabinet, as the government could not reconcile its views with that of the Parliamentary standing committee.
?The talks have progressed well till now and EU?s critical interests lie in the areas of multi-brand retail, financial (insurance, banking), legal, accounting, postal and courier services. In most of these sectors, a time-bound decision is something that the government cannot promise to India?s largest trading partner. We may review these sectors in future once domestic consensus is reached and, at that stage, we may consider taking commitments,? said a commerce ministry official.
The India-EU Bilateral Trade and Investment Agreement (BTIA), which seeks to reinforce the economic ties between the two, is designed to cover an entire gamut of areas: trade in goods and services, investments, defence and customs cooperation, among others.
The Indian side insists that despite EU upping the ante by harping on India?s ?protectionism?, there has been considerable headway in the talks on agriculture and services. Commerce and industry minister Anand Sharma is currently in Brussels meeting EU trade commissioner Karel De Gucht.
?The only problem could be areas where the domestic law is in picture, such as in retail, aviation and insurance, which will have a direct bearing on the talks. These are beyond our control as government/Parliament will take a call on these,? said another ministry official.
Bilateral trade between India and EU stood at $108.8 billion in 2011, up from $83.46 billion in 2010. FDI flows between the two amounted to $41.83 billion in 2011, a year which saw Indian companies invest around $24.39 billion in the 27-country union.
Sharma is also likely to discuss the contentious issue of autos and wines and spirits along with the status of the law related to government procurement. Other issues related to counter-terrorism, cooperation on energy, science and technology, anti-piracy and cyber security are also on ministerial agenda.