Modi has displayed a clear inclination for leveraging external sector for domestic economic growth
Sachin Chaturvedi, Business Standard |May 29, 2017
A connected concern is banking services where conflicting positions have already emerged. The EU has been pressing for more liberalization of FDI in multi-brand retail and insurance. Yet even as EU makes the case for liberalization of Indian banking and financial sector and opening up of FDI in multi-brand retail, India has countered it with a demand of greater market access in Mode-1 and Mode-4 (ie movement of labour and people). None of those have not made much progress so far.
IPR and Public Procurement
Launching of new IPR policy by India may have addressed several of the European concerns. Apprehensions still abound on exclusive rights over clinical trial data and avenues available for redressal. Since several Indian bio-pharmaceutical companies have also entered in drug development, a fresh look may be required in this sector. It is also important to point out here that within the ambit of IPR issues related to geographical indications, bringing in enhanced market access for spirits and wines is also being pressed for by the EU.
In this case a greater degree of discussion would pave way for some solution. Any such would have to factor India’s demand at WTO for extension of geographical indications to products other than wines and spirits, for instance, Darjeeling Tea and other products.
Similarly the new initiatives in public procurement signed on by India may play an important role in reassuring several European partners in New Delhi’s abiding faith in principles of transparency and the Ease of Doing Business. A Procurement Policy Division in the Department of Expenditure, Ministry of Finance has been created to facilitate greater uniformity and harmonization in public procurement process. The creation of public procurement portal and GEM-market place reflects continued commitment in this area.
Agriculture and Fisheries
In the realm of agricultural trade, EU’s peak tariff rates on dairy products, fruits and vegetables, sugar and confectionary, continue to be extremely high. Similarly, the fisheries subsidy is also a major point of botheration for India. Those subsidies that contribute to overfishing, is estimated to be as high as $35 billion. Just last month the European Parliament voted in favour of a resolution to allow for the construction of new fishing boats to extend fishing to the outermost regions, in addition to the assistance being extended through European Maritime Fishing Fund (EMFF) funds. According to a recent EU report monitoring the performance of the Common Fisheries Policy, Europe’s precious fish stocks are still being destroyed for a quick profit, while European citizens are being fed a raw deal by both the big end of the fishing industry and national governments. This naturally has spill over effects on the markets of other countries including India. One hopes that this time, when Ms Sitharaman is there, there would be a resolution of this concern.
India-EU FTA thus makes strong sense. Yet as both of them are strong economies with a decentralised structure which spawns powerful domestic lobbies, getting to allow more market access in each other’s territory is not easy. How far the FTA moves, is therefore going to be tricky.