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India, EU to seal free trade pact by year-end

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Mr Marten van den Berg.
Mr Marten van den Berg.

M.R. Subramani

M. Ramesh

Chennai, April 10

A Free Trade Agreement (FTA) between India and the European Union (EU) is likely to be signed before the end of this year, according to Mr Marten van den Berg, Deputy Director-General for Foreign Economic Relations of the Netherlands.

“Discussions between India and the EU are in the final stages and a deal is a few months away,” Mr van den Berg, who headed a Netherlands Economic Mission team on a five-day visit to India told Business Line here.

The FTA was also part of the talks he had with Indian officials earlier this week, he said.

In New Delhi, the Netherlands team signed a joint declaration with the Ministry of Heavy Industries for cooperation. The team also met the Union Minister for Corporate Affairs, Mr Salman Khurshid.

Last month, the EU trade chief, Mr Karel de Gucht, said in New Delhi that he was aiming to sign the FTA in October. The agreement, according to Mr de Gucht, could open up new export opportunities worth $9 billion to India.

The negotiations on the FTA have been on since 2007. The talks with the EU, the country's largest trading partner, has run into problems over market access and issues such as child labour in India. Bilateral trade between the two countries is estimated at $107 billion.

Issues such as lower tariff on agricultural products and phyto-sanitary norms have to be sorted out before the agreement can be signed.

Mr Gopal Ramanathan, Partner-Chairman of KPMG High Growth Markets, said the Netherlands was trying to convince Indian companies to list on the Amsterdam stock exchange. “We have talked to some companies listed on the Bombay Stock Exchange and are hopeful they will list on the Amsterdam bourse,” he said.

Amsterdam offers a fast track listing procedure compared to other stock exchanges such as London. “Large pension funds in Holland are looking at rapidly growing economies like India,” he said.

The Dutch are looking at Indian banks setting up a branch in their country. “We have talked to the State Bank of India and Punjab National Bank. There is good scope for an Indian bank in our country as over 40,000 Indians live there, while over 100 Indian companies are functioning there,” Mr Bob Hiensch, Ambassador to India, said.

The setting of a branch of an Indian bank will help firms from here in getting easy access to funds.

The economic mission's focus during this visit was on automotive and agri-business sectors.

“We can help Indian automotive companies enter Europe with testing and certification. We can also help in GPS and automotive parts,” Mr van dan Berg said.

On the agri-business front, Holland sees scope in logistics particularly in cooling and transport. “We can provide high-yielding horticulture plants such as tulips and bull semen. But phyto-sanitary issues are stopping it. We are also insisting on breeders' rights to provide help in agriculture,” said Mr Hiensch.

Tulip bulbs will have to be heated under Indian phyto-santiary norms, while the Netherlands officials are unclear why bull semen is not allowed into India.

The Netherlands, which has set up its first support office in India at Chennai, has offered to extend help on issues such as labour, social and environment.

(This article was published in the Business Line print edition dated April 11, 2010)
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