NEW DELHI: India wants to start negotiating free-trade pacts with both Britain and the European Union now that their divorce has come through even as it dithers over a preliminary trade pact with the US.
Top officials said they had been told to restart the off again and on again trade negotiations with EU, which started in 2007. And also to formally start trade talks with Britain now that it was no longer bound by EU trade rules.
India and the EU have a bilateral trade of around $115 billion, of which $ 21 billion is accounted for by Britain. For India, the EU is the largest export market and one where the trade is more or less evenly matched.
However, the problem with the negotiations is that like in the case of the Indo-US trade talks, both sides want too many concessions even as they defend many 'holy cows'.
Duties on automobiles, engineering goods, agriculture, wine and spirits and dairy products that were among the prickly issues in negotiations with the US are expected to remain so with the Europeans and British.
India's demand for freer movement of temporary skilled workers (read software techies and medical personnel) too is a bone of contention between the two sides, as is the opening up of India's strictly controlled banking sector.
Both Britain and the EU want India to scale down its steep duty on imported wines and spirits, which stands at a minimum of 152 per cent. However, India's home-grown liquor and winemakers lobby are unwilling to stand down and fear that cheap wine from Spain, France and other European markets could swamp India, forcing the Sulas and Grovers of India to drastically reduce prices.
Compromises have been suggested such as keeping a minimum floor price for imported whiskey and wine, so that only top-end spirits enter the Indian market, leaving the larger bulk market to home-grown distillers and winemakers, while making significant duty cuts, but till date obdurate bureaucracies on both sides have found no solution.
The biggest problem for the Indians as far as the EU is concerned is their unwillingness to budge without a deal on automobiles where they want Indians to open up to importing European vehicles even if it is at a later stage and to import spares and vehicle assembly kits at reduced tariff for the time being. Given the turmoil and layoffs in India's home-grown automobile market, such an agreement would, of course, be politically suicidal for the Government.
"The problem with targeting trade pacts in these days of slowdowns and tariff walls is that neither side is willing to look beyond their own self-interest and the give and take normal in such deals is very difficult to arrive at," pointed out Prof Biswajit Dhar of JNU, former Head, Centre for WTO Studies, Indian Institute of Foreign Trade.