India asks EU to be 'realistic' as FTA talks to restart in August

Talks were stuck over reduction of tariffs on auto components, wines and spirits

After a long hiatus, negotiations for having a Bilateral Trade and Investment Agreement (BTIA) between India and the European Union (EU) is expected to resume by the August even as both sides have locked their horns over tariff reduction in auto components and data security.

Talks for having a broadbased free trade agreement (FTA) with the 28-nation bloc EU have been going on since 2007. The last round of talks was held in 2013.

"The India-EU FTA should happen now. This is best time to conclude the FTA when their exports to India have plateaued and our exports to EU have plateaued. Besides, our textile and leather exports are also facing the heat there. So this is the best time," said commerce secretary Rajeev Kher.

Ever since its inception, the talks got stuck over reduction of tariffs on auto components and wines and spirits. On the other hand, India has demanded that EU grants it the coveted status of being a data secured nation, which is crucial for the country's IT sector that is seeking greater access to the European markets.

The EU follows high standard of data compliance and protection laws. Hence, a recognition from them as a 'data secure nation' will give a much-needed boost to the country's IT sector making it more competitive and facilitating inflow of investments in to the sector from EU into India.

According to certain estimates, the outsourcing business could surge to $50 billion annually from around $20 billion at present if India obtains the status from EU.

Besides, India is also insisting on increasing the immigration quota for augmenting services trade.

On auto components, the Indian auto industry is also up in arms against further duty reduction.

"Indian cars can already be exported at 10% duty to Europe. Obviously, India will not gain much by further reduction of EU duties for our cars but if Indian duties are reduced by 50% or even more, it will be a substantial reduction in tariff. The gains will clearly be for the EU industry," Society of Indian Automobile Manufacturers (SIAM) had said earlier.

Although the government is keen to have the FTA with EU but have also made it clear to them that their demands from India under the trade pact have to be realistic. The government has informed EU that some of their demands cannot be met considering the domestic compulsions, said another commerce department official.

The Narendra Modi-led government has informed EU that it will not be able to allow foreign investment in multibrand retail trading and foreign players in the country's legal services.