New Delhi: The proposed free trade agreement between India and EU is unlikely to move forward unless the insurance sector is further opened up by New Delhi, hinted a visiting European Parliament delegation Tuesday.
A seven-member team of European Parliament panel on international trade met Members of Standing Committee on Commerce and civil societies and discussed the pact.
“It (insurance) is one of the pending issues. There is no agreement in this so far and it one of the most important points for EU negotiators,” Leader of the delegation Pawel Zalewski told reporters here.
When asked whether EU will move without insurance, he said: “…Unless everything is agreed nothing is agreed”.
He also said the 27-nation bloc is keenly watching the progress of the Insurance Bill in Parliament.
The Insurance Laws (Amendment) Bill 2008 that seeks to raise FDI cap from 26 percent to 49 percent is pending before Parliament.
Zalewski said along with hiking FDI cap in insurance, “voting rights” should also be aligned with the shareholding.
He said the EU is also looking at comprehensive guidelines to be issued by the Reserve Bank of India on foreign banks.
“The national treatment issue is important in that,” he added.
Meanwhile, the Reserve Bank in its second quarter review of monetary policy said that it will soon come out with those guidelines to encourage foreign banks to convert into wholly owned subsidiaries and enjoy near-national treatment.
Zalewski said due to the forthcoming elections in India, progress in the negotiations was unlikely.
“What we have got after meeting Indian Parliamentarians was…Do not expect before elections in India the progress in negotiations could be done…,” he said.
However, he said that EU negotiators are ready to negotiate. “Our negotiators, if there is a hope for progress, we can do it…Our intention was to conclude the negotiations before elections.”
Talks between India-EU chief negotiators on FTA in May got stuck on the insurance matter.
India and the 27-nation bloc have been negotiating a Broad-based Trade and Investment Agreement (BTIA) since June 2007, but a breakthrough has not yet been achieved due to strong differences on several of the issues.
Besides significant duty cuts in automobiles, EU is pressing for tax reduction in wines and spirits and dairy products, a hike in FDI cap in the insurance sector and a strong intellectual property regime.
On the other hand, India wants liberalised visa norms for its professionals, data secure status and market access in services and pharmaceuticals sector.
India is among nations not considered data secure by the EU which obstructs flow of sensitive data, such as intellectual property or patient information under data protection laws in the EU.
“We understand that before elections, it is difficult to get the progress in our negotiations. We also had elections to EU Parliament in May next year,” Zalewski said.
“So we hope that as soon as possible, as soon as the conditions will be created we would come for negotiations,” he added.
On India’s demand to give a data security status, an EU official said that the matter is not related with trade.
On the intellectual property issue, he said that EU is not expecting India to change its law.
Earlier, the 27-nation bloc was pressing India to agree for an intellectual property rights regime over and above what the country has agreed multilaterally in the WTO.
“We will not expect that India will change its IPR laws …We understand concerns regarding the IPR and access to medicines,” he said.
Allaying fears on agri sector, he said that EU wants to export products which are not produced in India like pasta and olive oil. “So definitely, it would not be a threat for India.”
On the delegations visit to India, he said the purpose of the visit was to understand and discuss the concerns of Indian side on the FTA.
“We had meeting members of standing committee for commerce, with representatives of civil societies. Several issues were raised like child labour and access to medicines, which is crucial for India,” he said.
He said that the FTA would be game changer for both the sides in terms of enhancing trade and investments, improved access to Indian businessmen in the EU market besides tackling issues related with non-trade barriers.
“We based our estimation on three impact studies which showed that this agreement will be beneficial for Indian providing India with more than 2 million new jobs and increasing the Indian trade to EU from 5 to 10 percent,” he added.
The two-way commerce stood at USD 102.7 billion in 2012-13. India has already implemented comprehensive FTAs with countries like Japan, Malaysia and South Korea.