Since Prime Minister Narendra Modi’s meeting with European Council President Donald Tusk and European Commission President Jean-Claude Junker in Brussels on March 30, India has not received any letters from the European Union (EU) regarding bilateral trade talks. After waiting for more than one month, New Delhi has written to the EU trade negotiators for dates to resume trade talks. Speaking at a press conference in the capital over the weekend, Indian Commerce Minister Nirmala Sitharaman said that the Modi government tried hard to communicate with the 28-member bloc and now it is up to Brussels to respond.
In March, the EU officials told Prime Minister Modi that they were keen on resuming Free Trade Agreement (FTA) talks with India. “Cecilia Malmstrom, my counterpart, was not present during the India-EU Summit meeting. After returning to India, I have written to her to suggest dates when we could resume talks. But I have not yet heard from them,” said Sitharaman.
The minister further said although senior EU officials had unofficially told journalists that they wanted India to open up the automotive sector by lowering tariffs to zero ahead of resuming negotiations, India wanted official letter from Brussels. According to Sitharaman, India could discuss its points with EU officials, if they agreed to hold talks. Otherwise, it will be a closed chapter for India, which wants to safeguard its domestic auto industry that has acquired a degree of competitive advantage, she added.
The minister stressed that the EU officials made a mistake by interpreting India’s move to protect its auto industry as its “stubbornness”. She even accused the EU of making things difficult unnecessarily. Meanwhile, Sitharaman admitted that the “Indian government has a harder job, as it is battling a global perception of being a laggard in international trade negotiations”.
Asked whether India considers the EU as a ‘valuable trade partner’, the minister said that the bloc is fighting its own issues. As the EU has failed to negotiate Transatlantic Trade and Investment Partnership (TTIP) with the US, how can it hold FTA talks with India, asked Sitharaman. Moreover, a potential Brexit, and ongoing economic crisis in Greece and other Mediterranean economies have put the bloc under tremendous pressure. She informed the media that the EU, and not India, would decide the fate of trade talks.
However, CEO of National Institution for Transforming India Aayog (or NITI Aayog – a Government of India policy think-tank established by Prime Minister Narendra Modi in 2015) Amitabh Kant has a different view. He believes that New Delhi should make some compromises in order conclude the FTA talks with the EU. “It is better to compromise on wine and cheese and on large vehicles to push for our apparel exports with Europe so that we can penetrate these global markets. (It’s) Because this is one sector which will enable us to create large-scale jobs,” he stressed, arguing that otherwise, gains from increasing labour costs in China would flow to Vietnam and Bangladesh (instead of India). India has no other option, but to be more flexible in trade negotiations, added Kant.