No FDI in multibrand retail under trade pact: India to EU

India has categorically stated to the EU that it will not allow the entry of multibrand retail chains into India due to political compulsions

The government has categorically informed the European Union (EU) that it will not allow European multibrand retail firms to set up shop here, even as both sides decided to resume negotiations towards concluding the long-pending Bilateral Trade and Investment Agreement (BTIA).

While the negotiations for a BTIA, or a free trade agreement (FTA) as it is better known, started in 2007, it has missed two deadlines since then.

The government told EU it cannot allow the entry of multibrand retail chains due to political compulsions, although this is allowed under the foreign direct investment (FDI) policy.

“We have made it clear to the EU that we will not allow foreign direct investments in multibrand retail even if there is a policy,” a top official told Business Standard.

Talks are now to resume next month. This will be the first such attempt by the Narendra Modi government since it came to power in May last year. Commerce and industry minister Nirmala Sitharman and EU trade commissioner Cecilia Malmström have met a couple of times but an official round of talks has not taken place so far.

During these meetings, India and the EU were able to reach “common ground” with the latter dropping its insistence on including sustainable development issues as part of the deal. The EU, it seems , has also agreed to not let issues related to other development objectives such as environment protection and climate change be included in FTA.

India also seems to have got an upper hand in terms of narrowing their other demand on liberalising legal services.

However, the government has assured the EU it is willing to reduce tariffs on automobiles and wines and spirits, among the latters’ prime demands.

In the bargain, India has asked the EU to grant it a ‘data secure’ nation status. This will pave the way in boosting the country's information technology and IT-enabled services sectors. It has also demanded a relaxed visa regime and increase in immigration quotas for its teeming professionals.

The next round of talks will take place here on August 28, between J S Deepak, additional secretary (trade policy division) in the commerce department, and Ignacio Garcia Bercero, EU's Directorate General of Trade. Deepak and Barcero are the respective chief negotiators for India and EU.