Economic Times | 13 Apr, 2011
India, European Union closer to free trade agreement
Amiti Sen,ET Bureau
NEW DELHI : India and the European Union hope to sort out the remaining issues to a free trade agreement in their next round of meeting of officials in May in New Delhi.
A successful meeting of officials in Brussels last week has narrowed down the differences and raised the chances of a deal being inked by July this year.
The contentious remaining issues include opening up of the automobiles and wines sector, and visas to Indian professionals.
"Only some last mile issues remain which are very delicate and are to be sorted out right at the end," commerce secretary Rahul Khullar who participated in the Brussels meeting told ET. "We are hoping to get something together by July," he said.
India and the EU are working on an ambitious free trade agreement that involves elimination of import duties on most industrial and agricultural goods, opening up of the services market and more liberal rules on investments.
The 27-member block is India’s largest trading partner with bilateral trade touching $75 billion in 2009-10. The pact is expected to increase two-way trade by 30%.
"It is not possible to go public with the content till we make progress on the sensitive issues," Khullar said.
Automobile and auto parts is one area where India moves with caution in all its free trade agreements. It has so far managed to successfully shield the sector from tariff reduction commitments in all bilateral deals, including the recently-concluded FTA with Japan.
According to industry sources, there is a lot of pressure from the European auto industry on India to reduce duties not only on auto parts but also on cars.
The EU is also pushing India to bring down duties on wines and spirits from the present level of 150%, which is the ceiling level committed to at the WTO.