India, Germany bullish on Indo-EU trade pact

German chancellor Angela Merkel expressed optimism on India and the European Union completing their free trade agreement, saying "we are in a position to get there" and said the two sides have reached a "dynamic state of consultations." Pramit Pal Chaudhuri reports.

German chancellor Angela Merkel expressed optimism on India and the European Union completing their free trade agreement, saying "we are in a position to get there" and said the two sides have reached a "dynamic state of consultations." Commerce minister Anand Sharma, who will be going to Brussels on April 15 to meet the EU trade negotiator, said he was "very optimistic" about completing the FTA agreement.

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However, it was clear there were a number of outstanding issues between the two countries.

For Germany, EU's largest economy, the main interests are a liberalised automobile import regime by India and an increase in the insurance FDI cap to 49%.

Various sources say while India has rejected a demand for a timeline in which automobile tariffs are reduced to zero, they have accepted a tariff reduction to 50, and possibly, 30%. The two are considering a proposal for higher tariffs to apply to components rather than completely-knocked-down (CKD) kits.

Increasing insurance FDI limit may be more contentious as it needs parliamentary approval.