More than European, It is India, which stands to gain from early conclusion of FTA as Indian economy is on a sweet spot growing rapidly while other economies particularly advanced economies and China are slowing down. Thie would help European companies to invest in India, the only large economy that offere opportunity for investment. This would also help in giving new thrust to Prime Minister Narandra Modi's Make in India initiative and Skill India campaign to make the country a global manufacturing hub and skill capital of the world taking advantage of the demographic dividend. Sixty five per cent of India's 1.25 billion population are below the age of 35 that too at a time when most economies are witnessing ageing population.

Prime Minister Narendra Modi's recent visit to Brussels for India-EU summit has received a shot in the arem for the India-EU bilateral investment and trade agreement negotiations as it has revived the stalled negotiations after a gap of four years. Following Modi's visit, India's trade minister Nirmala Sitharaman sounded positive and said the Indian government now sees a possibility of conclusion of the free trade pact with the 28-nation EU. She is also hopeful of a free trade agreement with four-member grouping EFTA comprising Switzerland, Iceland, Norway and Liechtenstein this year itself. This augurs well for the economy. Both sides have welcomed the resumption of the talks at 13th India-EU summit.

But analysts fear that the negotiations for India-EU FTA is not going to be easy considering the difficulties faced druing the negotiations in the past. European Union is a tough negotiator and also there is now increasting protectionist tendencies among European Union as their economies are not doing well. Sitharaman is right in saying that for the successful completion of India-EU FTA, there is need for political will and a lot of give and take from both sides.

One of the thorny issues between India and EU is data security. Data exclusivity provides protection to the technical data generated by innovator companies to prove the usefulness of their products. In pharmaceutical sector, drug companies generate the data through expensive global clinical trials to prove the efficacy and safety of their new medicine.By gaining exclusive rights over this data, innovator companies can prevent their competitors from obtaining marketing licence for low-cost versions during the tenure of this exclusivity.

India has been strong in pharmaceutical industry and exports. Earlier in August last year the resumption of the free trade talks got stalled as EU banned sale of around 700 pharma products clinically tested by India's GVK Biosciences. Indian Government had taken a decision to defer the proposed talks between the Chief negotiators on BTIA then temporarily saying most of these drugs were already in EU market for many years without any adverse pharmaco-vigilance report from any member state and yet all of a sudden Eu decided to ban them. The India-EU trade talks, formally known as the Broad- based Trade and Investment Agreement (BTIA) has had a roller coaster journey right from the beginning. It is drugs exports this time, and in the previous years, it was exports of Indian mangoes and auto components. Pharmaceutical industry in India is one of the flagship sectors which has developed its reputation through strong research and safety protocols over the years.

Access to European market for Indian agriculture and horitculture products is also difficult as there is a strong farm lobby in Europe particularly in countries like France, which has dominant presence in EU. EU also wants unbridled access to Indian market for European wines, Scotch Whiskey and other liquour, whose demand has been growing in India. As a result of these thorny issues, the talks have missed several deadlines since 2007 because of many bottlenecks.

During the India-EU Summit both Modi and EU leaders welcomed the re-engagement of discussions for furthering the proposed pact, which is significant as the talks have resumed after a long gap.

Intellectual Property Rights is certainly a crucial issue along with duty cuts in automobile and spirits and liberal visa regime.

So far 13 rounds of negotiations have been held and the thorny issues seem to have progressed very little. But a view is emerging that India should reach out more in its interest so that some of the losses are mitigated. If not concluded, India may also suffer on account of trade diversion due to mega FTAs like the Trans Pacific Partnership, a trade treaty between 12 countries who together account for more than 50% of global GDP. India’s exports to the EU shrunk by 4.5 per cent to $49.3 billion in 2014-15. For the EU, greater access to the Indian market is equally critical in view of the economic slowdown in Europe.

One of the major demands of the EU is that India should lower its tariff rates on European automobiles and wines and spirits. A lowering of tariffs may well result in greater trade with the EU, but for India this may mean more imports than exports. There will be a greater opening in the Indian market for European goods than in the European market for Indian goods. EU tariff rates are already quite low and thus, apart from sectors like textiles and fisheries, India’s exports to the region might not increase significantly if tariffs are cut.

In goods trade, the real issue for India is non-tariff barriers such as sanitary and phytosanitary measures, and technical barriers to trade. The EU has been imposing stringent labeling requirements and trademark norms, for instance, which have dented India’s exports. About two years ago, India’s Alphonso mango exports were hit due to stringent non-tariff barriers.

In services trade, for India to benefit from an FTA with the EU, it needs strong binding promises by the EU on liberalising trade in services especially for the supply of services in what are known as modes 1 and 4. Europe is a $ 45 billion potential for outsourcing opportunity for India, which means more jobs in India. At this juncture, EU may dither because of high unemployment rates there.

The Vodafone and Cairn experience due to retrospective tax has made European companies wary of investments in India and EU is therefore keen India should make it amply clear that Indian government policies are not detrimental to the intrests of foreign investors.

Many European governments and companies feel that India is a difficult place to do business and hence expect a big push to reform in India, which is not happening. Though insurance and pension reforms have happened, GST, land reforms, FDI in multibrand retail are still stuck. Now some opening up has been made for foreign investors in food processing, retail and e-commerce, but EU would expect Indian government to accelerate more on reforms. (IPA Service)