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Indian Trade with Euro ZoneInternational Economics- WMG21

FORE SCHOOL OF MANAGEMENT

Submitted To:-

Dr. K.L. ChawlaProfessor, FORE

Submitted By:-Harsh Vyas (212011)

Rajdeep Roy Chowdhury (212025)Rishab Mehta (212028)

Sabyasachi Guha (212029)

Sunando Mukherjee (212036)

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Table of ContentsIntroduction ............................................................................................................................................ 3

European Union and India ...................................................................................................................... 3

Trade Picture ....................................................................................................................................... 4

Current Trade statistics ....................................................................................................................... 5

European Union and India Free Trade Agreement (FTA)........................................................................ 6

Benefits of FTA agreement ..................................................................................................................... 7

Economical benefits ............................................................................................................................ 7

European and Indian Trade Interests ................................................................................................. 7

Issues in Europe and India FTA agreement ............................................................................................. 8

Indias Interests................................................................................................................................... 8

EUs Interests...................................................................................................................................... 9

Cars and Wines/Sprits ......................................................................................................................... 9

Trade in AgriculturalCommodities ..................................................................................................... 9

Reconciling the Differences .................................................................................................................. 10

References ............................................................................................................................................ 11

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Introduction

With 1.2 billion people and the worlds fourth-largest economy, Indias recent growth and

development has been one of the most significant achievements. Over the six and half decades since

independence, the country has brought about a landmark agricultural revolution that hastransformed the nation from chronic dependence on grain imports into a global agricultural

powerhouse that is now a net exporter of food. Life expectancy has more than doubled, literacy

rates have quadrupled, health conditions have improved, and a sizeable middle class has emerged.

India is now home to globally recognized companies in pharmaceuticals and steel and information

and space technologies, and a growing voice on the international stage that is more in keeping with

its enormous size and potential.

India is fast emerging as a global leader, what with its vast, natural resources, and huge base of

skilled manpower. Combined with cutting edge technology, Indian trade market is making its

presence felt all across the world. Indian products and services are seen as of international standards

and globally competitive. Trade in India has made good progress on liberalizing trade regimes andcutting tariffs since the recent times, when most of the countries started with reforms.

Undertaking considerable industrial deregulation and other structural reforms, trade in India

recognizes that strong exports are critical for overall economic growth and poverty reduction.

Export-led growth has thus become a key thrust for the trade in India.

European Union and India

Considered natural allies in a wide range of global issues by both parties, diplomatic relations

between India and the EU were established in the early 1960s. Since the 1990s, cooperationbetween the two increased and their relationship was institutionalised. In 2004, the European

Commission (Commission) proposed the establishment of an ambitious strategic partnership

between the EU and India. The EU identified India as a strategic partner, as it increasingly

strengthened its position on the international scene, was booming economically and encompasses a

vast territory and population. These strategic partnerships have become one of the key features of

European foreign policy as a way for the EU to assert itself while allowing emerging powers like India

to build up their status as global players. In the context of this partnership, the EU seeks to deepen

economic ties with India through bilateral dialogue on intellectual property rights, trade defence

instruments, technical barriers to trade and customs cooperation.

The strategic partnership called for an EU-India Action Plan. This plan was presented at the EU-India

summit in 2005. Both parties agreed to several commitments, including some aimed at developing

trade and investment since, while trade and investment flows between India and the EU have been

increasing, they remain below potential. Therefore, negotiations towards a broad-based FTA

expanded the strategic partnership.

The EU and India are committed to further increase their trade in goods and services as well as

bilateral investment through trade and investment liberalisation under the Free Trade Agreement

negotiations that were launched in 2007.

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The 2012 negotiations made substantial progress and are at an important phase. The focal issues

include improved market access for goods and services package and achieving a meaningful chapter

on government procurement and sustainable development among others.

Trade Picture

India is an important trade partner for the EU and an emerging global economic power. The

country combines a sizable and growing market of more than 1 billion people.

The value of EU-India trade grew from 28.6 billion in 2003 to 72.7 billion in 2013.

EU investment stock in India grew substantially reaching 41.8 billion in 2012.

Trade in commercial services quadrupled in the past decade, going from 5.2billion in 2002

to 22.5 billion in 2012.

India has embarked on a process of economic reform and progressive integration with the global

economy that aims to put it on a path of rapid and sustained growth. However, India and European

Union trade regime and regulatory environment remains comparatively restrictive. Both still

maintains substantial tariff and non-tariff barriers that hinder trade. In addition to tariff barriers to

imports, both of them also imposes a number of non-tariff barriers in the form of quantitativerestrictions, import licensing, mandatory testing and certification for a large number of products, as

well as complicated and lengthy customs procedures.

With its combination of rapid growth, complementary trade baskets and relatively high market

protection, India is an obvious partner for a free trade agreement (FTA) for the EU.

The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade

Group in October 2006, which was tasked with assessing the viability of an FTA between the EU and

India. Other studies have reinforced the economic potential of an FTA between the EU and India,

notably a sustainability impact assessment was carried out by the EU.

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Negotiations for a comprehensive FTA were started in June 2007 and are ongoing. This would be one

of the most significant trade agreements, touching the lives of 1.7 billion people.

India enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

Current Trade statistics are mentioned below

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European Union and India Free Trade Agreement (FTA)

The EU-28 is Indias largest trading partner, accounting for roughly 15 percent of total trade in goods

and services. It is an important market for Indias export of textiles, apparel, pharmaceuticals, gems,

jewellery and IT. The EU is also the largest source of FDI inflows to India, accounting for over one-

fourth of the total.

A High Level Trade Group (HLTG) made up of government representatives and business leaders wasset up and issued a report recommending several liberalisation measures to be used as a blueprint

for FTA negotiations. At the end of 2006, the Commission requested negotiating mandates from EU

Member States for bilateral trade agreements with India. The FTAs were to be driven by

competitiveness and would be comprehensive and ambitious in coverage, targeting the highest

possible degree of trade liberalisation, including services and investment.

The Global Europe Strategy marked a shift in the EUs policies towards trade by emphasising

competition and corporate-driven g