The Hindu Business Line : EU-India Summit

On the economic front, the meet covered implementation of the Joint Action Plan adopted at the last summit in Delhi in September 2005. It was to endorse the recommendations of the EU-India High Level Trade Group on ways to further enhance bilateral trade and investment.

Specifically, the infrastructure investment of $310 billion was enthusiastically viewed by the EU delegation since it might open a huge potential for investment and trade.

Good case for negotiation

The EU-India High Level Trade Group has found that there is a good case for negotiation of a broad-based trade and investment agreement. Since the first EU-India Summit held in 2000 in Lisbon, trade between both partners has increased from euro25.6 billion to around euro 40 billion in 2005.

The European Union consisting of 25 nations remains India's largest trading partner, accounting for 22.34 per cent of India's total exports and 16 per cent of India's total imports in the year 2005-06.

However, India accounts for only two per cent of EU's total exports and 1.6 per cent of its imports. India's share in EU trade in services is 1.1 per cent, which translates into euro 7.1 billion including imports and exports.

Working groups

Several Working Groups have been set up in sectors such as textiles and clothing, steel, agriculture and marine products, sanitary and phyto-sanitary (SPS) issues, Technical Barriers to Trade (TBT) and Customs Cooperation. These Working Groups aim to find solutions to unresolved issues, to ensure that trade progresses smoothly on both sides, provide technical assistance wherever required and enhance bilateral trade by increasing market access in these areas.

Some areas where the EU and India are looking for mutually acceptable solutions are: Wines and spirits, textiles and clothing, food safety and industrial standards. The EU has a population of 450 million with a GDP of over euro 9.25 trillion, which has, in turn, created a larger market for Indian exporters and service providers. In addition to a single set of trade rules, the enlarged EU offers a single tariff and a single set of administrative procedures.

India, the key beneficiary

An important instrument of the EU is its Generalised System of Preferences (GSP) scheme, which provides duty reduction and duty-free and quota free access to products from developing and least developed countries (LDCs). India has been a major beneficiary of this instrument. Since 2004, India became the first beneficiary of the EU's GSP scheme out of 180 countries.

In 2005, preferential imports entering EU from India under the GSP reached euro 8 billion. The main sectors responsible for India's top position are industrial goods, which account for euro 4,311 million followed by textile euro 3,142 million and agriculture, euro 547 million.

Sailing in same boat

Both the EU and India are important members of the World Trade Organisation. There are many areas where the positions of both the EU and India have considerable similarities and areas of divergences. The Doha Development Agenda (DDA) is at a crucial stage, and its successful culmination has considerable relevance for the global trading system and the integration of the developing world into the system even further. The EU's cooperation in this is of paramount importance. The real bone of contention in WTO negotiations is the huge agricultural subsidy, which both the EU and the US are providing for their farmers.

This has distorted fair competition in trade in agricultural commodities but the issue is a multilateral one and has to be resolved satisfactorily in WTO sessions.

The visit of the Prime Minister, Dr Manmohan Singh, and a powerful Indian delegation to the Helsinki Summit did serve the purpose of focusing on key issues between India and the European Union and the dialogue process will hopefully build on the positive aspects of relationship.

(The author is a New Delhi-based management and financial consultant.)

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