Amid Prime Minister Narendra Modi’s tour of three industrialised democracies — France, Germany and Canada — to pursue India’s “economic interests” and promote “Make in India” by flagging off major business fair Hannover Messe in Germany, EU trade commissioner Cecilia Malmström, in an email interview with Shruti Srivastava, says that the 28-nation bloc is willing to engage with the Indian government in an ambitious free trade agreement. Excerpts:
The EU-India free trade agreement has been stalled for quite some time now. According to you, what are the reasons for the same?
After much progress was achieved in the negotiations, in the summer 2013 it became clear that there was a mismatch in the level of ambitions and expectations. While the EU remains committed to an ambitious and broad FTA, it also keeps its commitment to concede significant degrees of asymmetry to the Indian side as long as this eventually leads to substantial liberalisation.
What are the areas of concern for the EU with regards to the proposed free trade agreement?
Mainly but not exclusively tariffs on cars and car parts as well as on wines and spirits; liberalisation in some service sectors in line with the encouraging developments brought by the adoption of the Insurance Bill; protection of Geographical Indications; and further concessions in government procurements.
Have you approached the new Indian government with regards to the pending issues in the FTA negotiations?
During the last year and a half, the EU has shared with India, on different occasions, the key outstanding issues for a political conclusion of the FTA. In addition, the EU has indicated several times to the Indian government its readiness to engage in an ambitious agreement. Most recently, at the beginning of March 2015, I wrote a letter to commerce minister Sitharaman.
What has been the response of the investors in the EU member nations with regards to the slew of measures taken by the Indian government on improving the business and trade environment?
The Indian government’s announcements and efforts to create a pro-business environment facilitating trade and growth are encouraging and they contribute to increasing the overall confidence of EU companies in the Indian market. In addition, concrete developments and measures such as the adoption of some key laws like the GST Bill would facilitate this process even further. However there are still several hurdles to overcome: protectionist measures like high import tariffs, unpredictable or burdensome conformity assessment and SPS requirements as well as compulsory local content requirements. While these are aimed at encouraging domestic manufacturing, they discourage in fact the integration of India into regional and global supply chains and make the final price of the product more expensive even for Indian consumers.
What is the response of the insurance companies in the EU regarding the Insurance Bill passed by the government?
The reaction has been very positive and EU insurance and re-insurance companies are reportedly currently fine-tuning their business strategies to seize the benefits granted by the law.
Do you think the recent cases of communal attacks on minorities in India will dampen the investor enthusiasm?
The investors’ enthusiasm is mainly driven by a macro- and micro-economic environment which is conducive for business. In this context, social stability plays certainly a role, but we have not heard any specific complaint raised by EU companies in this respect.
There is thinking that the EU is giving priority to the TTIP with the US as compared to the FTA negotiations with India. What is your comment?
The EU is currently engaged in several negotiations in addition to TTIP, inter alia with Vietnam – the EU is ready to the call as soon as India replies to our latest suggestions.