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India, EU talks on FTA expected to make headway

world Updated: Apr 15, 2013 12:40 IST
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Crucial talks between India and the European Union on their proposed free trade agreement (FTA) got under way in Brussels amidst new optimism that a deal could be reached before the end of 2013.

Union Commerce and Industry Minister Anand Sharma is scheduled to meet EU trade commissioner Karel De Gucht and other top officials later in the day in an attempt to take forward the six-year long negotiations. The talks are currently bogged down in disputes over EU demands to raise the equity cap on FDI in India's insurance sector, reducing the tariffs on imports of automobiles, protection of intellectual property rights (IPR) and other issues.

India has been seeking greater access for its services sector in the 27-nation EU and it is also concerned that the EU demands for stricter implementation of the IPR rules might affect the country's generic industry or force the country to amend its patent law.

India's demands for granting data secure status by the EU and incorporating an investment protection clause in the FTA are expected to figure in the discussions here on Monday. The EU has so far refused to give India data secure status and this has prevented the flow of sensitive data, including those information vital for India's IT services industry.

New hopes for a successful conclusion of the negotiations between India and its largest trading partner were raised after the EU's largest economy Germany last week voiced its support for an early signing of the FTA. German Chancellor Angela Merkel and Minister for Economy and Technology Philipp Roesler have spoken in favour of signing of the FTA before the end of this year.

"An early signing of the FTA, if possible this year itself, will be in the interest of both countries," Roesler told a meeting with Sharma ahead of the official opening of the second inter-governmental consultations between the two countries in Berlin. A successful trade pact between India and the EU will be an important step towards enhancing bilateral economic cooperation and trade, he said.

However, Roesler raised German industry's concerns that patent protection is no longer sufficiently guaranteed in India and stressed that "dependable conditions" are necessary for investments by German companies in India.

Chancellor Merkel had said after the recent two-day consultations jointly chaired with Prime Minister Manmohan Singh that the insurance cap is still an important issue. "We have not yet overcome all the difficulties," but the two countries are now in a position to reach an agreement, she said.