Prime Minister Manmohan Singh and German Chancellor Angela Merkel are likely to find large unfinished paragraphs in their India-EU free trade agreement when they meet this week.
Despite 16 rounds of negotiations and six years of work,industry and agriculture lobbies on both sides are still working out differences in tax treatment for automobiles,dairy products and movement of professionals across borders.
While the EU companies want to participate in all government tenders,Indians are uncomfortable setting up customs control to see that no intellectual property violations occur in exports from the country. The EU also wants an assurance from India that the European banks would not be divested. According to a government official,the only way out for both the sides it to temper their ambitions for an early closure of negotiations. They can resume further negotiations once the deal is sealed,the official said.
Auto sector: The issues in the sector were assumed resolved but the EU has reopened them. Germany has sought an indefinite tariff rate quota on imports of cars from Europe and an eventual zero duty on all cars while asking for greater opening up of the Indian market to suit EUs technical regulations. We have not agreed to these demands as we have to ensure the interest of our auto industry,which is still at a nascent stage, the official said.
Data secure status: India has still not got data secure status from the EU despite the fact that almost all Fortune 500 companies have entrusted India with their important data.
This has been preventing flow of sophisticated outsourcing business to India and free flow of sensitive information to India such as patient information for tele-medicine. Refusal of the EU to do so will nullify the potential benefits of any market access offered by the EU under Mode 1.
On insurance sector: Further,the EU has also sought an increase in the foreign direct investment (FDI) limit in the insurance sector to 49 per cent from the current 26 per cent,the Bill for which is pending with Parliament. Earlier,the EU had sought opening up of the multi-brand retail sector,a demand which has already been met by India.
free movement of persons: India is concerned about the safeguard clause in Mode 4. The clause kicks in when 20 per cent of the EUs committed number of professionals enter respective members territory. Also,India wants secondary mobility inside EU member states for commercial service suppliers and professionals. However,the EU is reluctant and is yet to decide.
Pharma: The EU has been pushing for rights to seize drugs transiting through its territory in case its custom authorities suspect IP violation. India has refused to give such rights.