416 items in EU's negative list for FTA

The European Union (EU) has drawn up an initial negative list of 416 tradeable items on which it does not intend to provide duty cuts as part of the proposed free trade agreement (FTA) with India. The items on the list are mainly goods from sectors like chemicals and plastics, rubber, textiles and related items, raw hides, precious stones and metals, computers and electrical machinery, and some classes of vehicles.

Significantly, 226 items on the list come under the category of chemicals, pharmaceuticals, and plastics and allied products. In 2006-07, India exported organic chemicals worth $1.4 billion and pharmaceutical products worth $451 million to the EU.

The EU is India's largest trading partner, with overall trade estimated at $68 billion during 2007-08. Industry body Ficci has said India's share in EU's imports is only 1.8 per cent, while its exports account for 21 per cent of the entire merchandise export basket.

An India-EU FTA is expected to lead to enhanced trade in goods and services. Ficci has projected that merchandise trade between India and the EU will reach $251 billion by 2015.

Official sources said the commerce ministry had started the process of consultation with the domestic industry to identify the items on which India would demand tariff concessions.

European Commission officials told Business Standard they were awaiting India's list of items on which it would not offer duty cuts.

Negotiators from India and the EU are scheduled to meet to discuss the FTA in March. The last round was held in December 2007.

Commerce Minister Kamal Nath had recently said that India intended to offer 90 per cent of its tariff lines (products) for duty free imports from the EU. In return, India expects the EU to eliminate duties on 95 per cent tariff lines.

However, the EU is insisting that the number of tariff lines be the same on both sides. "There should be complimentary tariff elimination for both the parties. According to an India-EU High-Level Trade Group report, tariff is to be reduced on 90 per cent tariff lines by both the sides, with an option to increase the share further," said a European Commission official.