With Germany terming insurance sector reforms in India as “undeniably an important subject matter” for the conclusion of the India-EU free trade agreement (FTA),Prime Minister Manmohan Singh said on Thursday that India is committed to liberalisation of the insurance sector even as it requires parliamentary legislation.
With regard to the reforms of the insurance sector,I have explained to the Chancellor and to our colleagues on the German side,that we are committed to liberalisation of the insurance sector cap on FDI equity participation. Our cabinet has already approved a proposal to raise the level of foreign equity participation from 26 per cent to 49 per cent,but this requires parliamentary legislation, Singh said at a joint press conference with German Chancellor Angela Merkel.
During talks on Wednesday evening,the two leaders are reported to have held candid discussions on the issue,at the end of which Merkel was learnt to have remarked,we do understand how oppositions react before elections.
But,as Foreign Secretary Ranjan Mathai conceded later,from the German perspective,a forward movement on the insurance issue is very important. But,everything depends on the outcome at Brussels, he said.
Ahead of the April 15 talks with the EU on a broad-based trade and investment agreement,the two sides were said to have made substantive progress on the sticking points in concluding the FTA.
I think we came a step closer today but there are still different expectations on both sides that we need to overcome, said Merkel.
On Germanys demand for a cut in customs duty on automobiles,India proposed that it would help and facilitate German automobile companies start manufacturing units in the country that would take care of their concerns about customs duty. India,on the other hand,wants EU to grant it data secure country status,on the plea that the EU has such an agreement with the US,which has always treated India as a data secure nation.
Asked about the impediments in the way of the India-EU FTA,Merkel cited issues related to the insurance and automobile sectors,as well as inclusion of intellectual property rights.
You are very right that there have been issues which have held back progress in conclusion of a broad-based trade and investment agreement between India and the EU. But there has been progress as well. I think there were some problems in the levels of tariff protection which we would give to Indias automobile sector and we had a very thorough discussion of this issue. I hope that when the ministers meet later this week in Brussels,further progress can also be registered, said Singh.
India and Germany today signed a memorandum of understanding (MoU) in the field of higher education and five declarations of intent on promotion of German as a foreign language in India,cooperation in the area of civil security research,establishment of green energy corridors and establishment of a working group on quality infrastructure for cooperation in standardisation,conformity assessment and product safety.
Economic ties have been a defining feature of our relationship. Germany is one of our largest economic partners globally. I encouraged increased German participation in Indias rapid economic growth and our plans to modernise and upgrade our manufacturing and infrastructure sectors. Our infrastructure plans entail investment of a trillion dollars in the next five years, said the Prime Minister after the signing ceremony.
We agreed that the persisting weakness in the global economy require concerted global response to stimulate recovery without adding to fiscal and financial risks. I am optimistic about European recovery and stability. I expressed our appreciation for Chancellor Merkels leadership in dealing with the challenges in the Eurozone. I also shared our governments resolve to restore Indias own growth to long term trend of 7.5 to 8 per cent, he said.