India To Resist Wto Pressure On Insurance Reforms At Geneva

India has held preliminary bilateral discussions on the financial services sector with all her major trading partners in Geneva over the last fortnight, said sources in the commerce ministry. A meeting of World Trade Organisation (WTO) members has decided to conclude the negotiations by December 12.

However, government officials said India was unlikely to gain much from these negotiations. Unlike the earlier round of financial services negotiations, which was held simultaneously with a discussion on the movement of natural persons, there are no other on-going rounds this time which can be used by India as a negotiating chip. During the last round, India had gained concessions on movement of natural persons by giving concessions on financial services.

 

Further commitments are now being sought from India on opening up the insurance sector and removing foreign branch limitations. Only five-eight new foreign branches are presently allowed to be set up per year in India. Sources said that India was unlikely to make an improved offer on the insurance front but may consider other minor issues. The country would proceed with liberalisation of the insurance sector at the pace which it considered appropriate, they added.

In July 1996, about 30 countries had offered improved commitments in the financial services sector. However, the US opted out of the agreement on the grounds that the offers were insufficient and the US could not make any offer which would operate on an most favoured nation (MFN) basis.

The nature of the commitments in the earlier WTO agreement included improvements in the number of licences available for establishment of foreign financial institutions, guaranteed levels of foreign equity participation in branches, subsidiaries or affiliates of banks and insurance companies, removal or liberalisation of nationality or residence requirements for members of the boards of financial institutions and the participation of foreign owned banks in cheque clearing and settlement systems.