India-EU trade pact talks inconclusive

India refuses further tariff reduction in auto sector, demands 'data-secure' status

A meeting between Commerce & Industry and Textiles Minister Anand Sharma and European Union (EU) trade commissioner Karel de Gucht in Brussels on Monday remained inconclusive, with both sides sticking to their respective positions.

India clearly told the EU it would "not accept" any further concession, as far as the automobile sector was concerned. The EU, especially Germany, had demanded an indefinite tariff rate quota on the import of cars from Europe, as well as zero duty on all cars, eventually. It also sought the Indian market be opened further, a senior official told Business Standard.

At the meeting, both ministers reviewed the progress in talks for an ambitious free trade agreement (FTA). Today's meeting comes within days of Prime Minister Manmohan Singh and German Chancellor Angela Merkel agreeing to a "successful outcome".

Talks on the FTA began in 2007.

The official said India had already offered "much more" to EU compared to what it had offered to Japan and Korea, with whom it had similar agreements. "Now, EU has to narrow its ambitions if it truly wants the deal with India. We have given the best we can, much better than what we have offered to anybody so far, in the automobile sector and in other areas, too. But they seem to be asking for more and more concessions," the official said.

India once again asked EU to remove the 20 per cent threshold relating to the safeguard clause introduced under the Mode-4 quota of services trade. This relates to free movement of Indian professionals under a relaxed visa regime. However, it seemed EU didn't agree to India's demand.

"This provision will significantly reduce the benefits India can enjoy. With such a provision, it becomes meaningless for India to negotiate on services," the official said.

Under services trade, India also expressed "severe concern" on EU's denial to recognise it as a 'data-secure' nation, without which it wouldn't be able to gain substantial market access for its information technology industry. According to EU law, European countries engaged in outsourcing business with countries not certified as 'data-secure' have to follow stringent contractual obligations that raise operating costs and affect competitiveness.

An official statement on the meeting is expected to be released tomorrow.

So far, 16 rounds of negotiations on the FTA have been held. The last round was held in Brussels on March 18-22.