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India-EU trade pact to benefit both sides: Patel

New Delhi, Sept 13, 2013, (PTI) :
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The proposed India-EU Free Trade Agreement (FTA) will benefit both the sides and spur two-way trade, the Ministry of Heavy Industry said today.

"The recent developments in the India-EU FTA will further facilitate trade between the two sides and will benefit the industries, service providers and the markets," said an official release, quoting Heavy Industry Minister Praful Patel.

He was speaking at the IAA (Internationale Automobil- Ausstellung) India Day 2013 held at Frankfurt in Germany.


In May 2013, the chief negotiators' from both the sides met but failed to bridge "substantial gaps" on crucial issues, including auto, insurance and data security status for IT sector.

Negotiations for the Broadbased Trade and Investment Agreement (BTIA) between India and the 27-nation European Union bloc were launched in June 2007, but have been facing many hurdles.

Patel said the importance of increasing trade in the globalised economy has been acknowledged in India and it has actively supported bilateral and multilateral pacts.

One of the contentious issues between the two sides is cut on import duties on cars from the EU. Earlier, the ministry had demanded that import duties on cars from the EU should not be cut so as to protect the domestic industry.

EU has been pushing for reduction in import duties by India as car makers in the continent struggle with excess capacities and reducing sales due to the economic uncertainty.

India's auto sector too has seen a slowdown. While car makers struggled, two-wheeler makers such as Hero MotoCorp and Honda Motorcycle and Scooter India reported sales growth in August this year.

According to the data by the Society of Indian Automobile Manufacturers, car sales fell for a record ninth month in a row in July, declining 7.4 per cent, as the economic slowdown and low consumer sentiment hit demand. Vehicle sales across all categories dropped 2.08 per cent to 14,15,102 units in July 2013 from 14,45,112 units a year earlier.

Last month, however, saw an uptick but the industry body has warned that tough market conditions still remain. Interest rates are high, fuel prices continue to be high while sentiments are extremely low,

Overall, meanwhile, the total trade between India and EU stood at USD 94.43 billion during April-February 2012-13. It was USD 109.86 billion for the entire 2011-12 fiscal.
Both sides are keen on pushing the two-way trade and want to conclude the FTA that has been in the works since 2007.

Patel said India has been facing many challenges including fluctuation in the rupee and the high Current Account Deficit (CAD).

The government, he said, has taken a number of measures such as legislative actions recently that would show results in the near future. Besides, good crops are expected and they would strengthen the vast rural economy.

"Therefore, in the coming months, we are confident that we shall overcome the current difficulties and regain high rate of growth, sooner rather than later," he said.

Stating that India car sales are expected to rise in India to 9 million per year by 2020, from 3 million, Patel said, "It provides a great opportunity for German and European auto majors and component manufacturers to select India as a destination of choice for long haul."

He invited German companies to invest in India. "I extend my invitation to the industry leaders to come to India and be a part of the growth story - that is India, which has one of the largest young population and has a strong IT and educational base..," he said.
Several German automobile companies including BMW, Mercedes Benz, Volkswagen have brought their technological excellence into India, he added.

As many as 1,600 Indo-German collaboration agreements and around 600 Indo-German joint ventures are in operation.

Recognising the vast potential of mutually beneficial relationship between the auto industry and their stakeholders in the two countries, Patel said that the India-Germany Joint Working Group (JWG) on auto sector, which was set up in 2009, has been extended for another two years.

The JWG mechanism has provided a great impetus towards synergising the unique abilities as well as share competencies of the two sides.

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