India and the European Union have moved closer to concluding a Free Trade Agreement. This was indicated by Prime Minister Manmohan Singh and German Chancellor Angela Merkel at a joint press interaction after the conclusion of the second Indo-Germany Governmental Consultations here on Thursday.
“We are now in a position where we can get there. We are not ready to sign yet but we thank India for paving the way for signing the agreement. We are in a dynamic stage of consultation,” Ms. Merkel said.
Dr. Singh said the two sides had agreed on the importance of early conclusion of a “balanced” India-EU broad-based Trade and Investment Agreement.
Ms. Merkel indicated that further progress was needed on reducing the levels India imposes on import of automobiles and on hiking the foreign direct investment (FDI) limit in the insurance sector.
Dr. Singh said he had explained to the Chancellor that India was committed to liberalising the FDI cap in the insurance sector.
At present, India allows only 26 per cent FDI in insurance although the Union Cabinet approved a proposal for hiking this to 49 per cent. The proposal has to be approved by Parliament before this increase can be implemented.
Foreign Secretary Ranjan Mathai said the Prime Minister pointed out that the government had done what it had to but the measure now had to be pushed through in Parliament. “An attempt is being made to build consensus to achieve that objective,” the Foreign Secretary said quoting Dr. Singh.Commerce Minister Anand Sharma said that though some negotiations still remained, substantial progress had been made. “The offer India has put on the table is the most ambitious, including sectors which we have never included in the FTA. We are discussing automobiles; all issues on agriculture have been settled,” he added.
Asked whether he hoped to sign the Free Trade Agreement during his coming visit to the EU headquarters in Brussels, Mr. Sharma said, “I am very optimistic.” He will be in Brussels from April 15.
India and Germany also agreed to set up a high technology partnership group with Dr. Singh saying “we look forward to expanded defence cooperation anchored in technology transfer, co-development and co-production in India.” He said high technology commerce would benefit from further easing of German export controls.
The two countries inked six agreements, including an MoU on cooperation in higher education.