KAMAL NATH CALLS FOR BIG PUSH TO INDO-EU TRADE AND INVESTMENT RELATIONS CALLS FOR EASING OF NON-TARIFF BARRIERS AND GREATER MARKET ACCCESS FOR INDIAN PROFESSIONALS SIXTH INDIA-EU BUSINESS SUMMIT
Date : 07 Sep 2005
Location : New Delhi
Shri Kamal Nath, Union Minister of Commerce & Industry, today called for giving a major renewed thrust to India’s trade and investment relations with the European Union (EU). Addressing the Sixth India-EU Business Summit, jointly organised by the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (FICCI), in partnership with the Ministry of Commerce & Industry here this morning, Shri Kamal Nath said that an ambitious Joint Action Plan had been drawn up by both sides, at the highest level, to take the Indo-EU strategic partnership forward, and trade must play a central role in the development of this relationship.
Underlining that India’s greatest strength lay in demographic profile, Shri Kamal Nath urged greater market access for Indian professionals in the EU. “Our young people are rearing to take up new challenges, and are ideally suited to fill the gap between the availability of skilled workforce and the numbers required to maintain current productivity and efficiency levels in Europe. I speak not of immigration, but of services delivered remotely in this cyber-connected world of ours. India has demonstrated skills in the Services sector”, he said. Referring to concerns expressed in some EU countries about possible loss of jobs in Europe as a result of outsourcing of business process operations (BPO) from Europe to India, Shri Kamal Nath said that this misconception should be removed from the mind of common man in Europe. Rather the EU should look at outsourcing as a business cooperation model which served the interests of both sides and strengthen competitiveness, and not as something detracting from its own prosperity, he said.
The Minister also called upon the EU to ease non-tariff barriers to Indian exports. “Indian trade and industry circles feel that while the Indian economy has liberalised and markets have been opened up offering new vistas to global trade and industry, reciprocal benefits have not flowed from the developed world to us. The mounting stringency of standards, cumbersome and complex rules and procedures and frequent use of trade defence instruments are emerging as serious barriers to enhanced economic co-operation. India’s agro & marine exports to Europe stand at about a billion dollars, and constitute around 6% of total Indian exports to the EU. These products face considerable market access problems because of SPS-related EC legislations. Not all such standards are in conformity with the international ones and are often based on excessive precaution and perceived rather than real risk”, he said.
He cited EU’s anti-dumping actions against Indian products as another major concern for India, especially in areas like textiles, electronics, chemicals & pharmaceuticals, herbal remedies and steel.
On WTO matters, Shri Kamal Nath said: “Both India and EU share a common objective of strengthening the multilateral trading regime. We expect the bouquet of results from the present WTO negotiations to provide developing countries better opportunities to use trade for fulfilling their developmental goals. There has to be a significant increase in market access on agricultural and non-agricultural products, as well the key area of services”.
Trade and investment scenario
India-EU bilateral trade last year at 35 billion dollars, showed a growth of only 20% – well below India’s average trade growth rate. The European Union continues to be India’s largest trading partner; however, others are catching up fast. A significant part of our growth has come from intra-Asian trade, fuelled by China, Korea and Singapore. From the EU perspective, things are less satisfying: India ranks 14th as EU’s overseas trading partner for EU exports, and 13th for imports into the EU. India’s share in EU’s global trade is under 2%. The bulk of India’s trade continues to be in the traditional product categories, and there has been little change in the composition of this basket. The picture on FDI is not much different. FDI inflows from the countries of the European Union during the last 14 years total up to 7 billion dollars, which is barely a fifth of the total inflow of FDI into India. India receives only a very small fraction of the EU’s investments abroad; perhaps, less than a percent. “This level of investment is certainly not commensurate with the level of mutual trust and easy familiarity that we enjoy. It is time that we seriously examine the reasons for this less than satisfactory state of affairs. We need to find innovative solutions to overcome this hiatus in our economic relations”, Shri Kamal Nath said.