Merkel: India-EU free trade pact will need compromises

Berlin, April 14

A Free Trade Agreement between India and the EU would require "compromises" by all sides, German Chancellor Angela Merkel said today as Prime Minister Narendra Modi sought her help for an early conclusion of a "balanced and mutually beneficial" deal, stalled for two years.

"I have requested Chancellor Merkel that India and European Union should resume the negotiations quickly and conclude a balanced and mutually beneficial agreement at the earliest," Modi said during a joint press conference with German Chancellor after a meeting with her.

"The development of India as a manufacturing hub and expansion of infrastructure of India will also be beneficial for trade. Our imports will also grow. And, it is natural that German companies will benefit a lot from it.

"In this context, I would also like to state that negotiations between India and the European Union on a Broad-based Trade and Investment Agreement have remained stalled for two years," he said.

Speaking alongside Modi, Merkel said, "We have decided that talks should continue between India and the EU. We have come a long way and it would be desirable if we crossed the hurdle. It will require compromises by all sides. India's concerns will also require to be addressed," Merkel said.

"We agree that we should strengthen our efforts towards carrying on negotiations for an ambitious EU-India Free Trade Agreement with a view to its early conclusion," the two leaders said in a joint statement after bilateral talks.

Launched in June 2007, negotiations for the proposed Broad-based Trade and Investment Agreement (BTIA) between India and the 28-member European bloc have witnessed many hurdles as both the sides have major differences on crucial issues.

The two sides are yet to iron out issues related to tariffs and movement of professionals but the EU has shown an inclination to restart talks.

Besides demanding significant duty cuts in automobiles, the EU wants tax reduction in wines, spirits and dairy products, and a strong intellectual property regime.  On the other hand, India is asking for granting 'data secure nation' status to it by the EU. The country is among nations not considered data secure by the EU.

The matter is crucial as it will have a bearing on Indian IT companies wanting market access. The EU law mandates that European countries doing outsourcing business with countries that are not certified as data secure have to follow stringent contractual obligations which increases operating costs and affects competitiveness. India also wants liberalised visa norms for its professionals and market access in services and pharma sector. — PTI