FTA with EU must cover 95 pc goods for real benefit to India

New Delhi, Sept 26 (PTI) Expressing concern that all
items of export interest to India, like leather, textiles and
garments, may not get covered in F.T.A. being negotiated with
the European Union, F.I.C.C.I. has suggested expansion of
scope of the pact to cover 95 percent of merchandise goods.

The E.U. should eliminate tariffs on 95 percent of the
goods under the Free Trade Agreement instead of the 90 percent
being targeted by the India-E.U. High Level Trade Group,
Federation of Indian Chambers of Commerce and Industry said.

"This 90 percent coverage will not guarantee any real
market access for products of export interest to India in the
E.U.," it said.

The proposed F.T.A. could increase India's share in
E..U's trade provided the latter gives meaningful market
access to the products of export interest to India in the EU
markets like textiles, apparels, leather products, chemicals
and architectural services, besides job opportunities to
medical and I.T. professionals, the Chamber stressed.

The 27-nation bloc has high tariffs on approximately 9
percent of its overall tariff lines. If the coverage is
limited to 90 percent, the E.U. could easily prevent its
sensitive products from being traded with India, it pointed
out.

In 2007, share of India in E.U.'s total goods imports was
only 1.9 percent, while in services it was 1.5 percent.
Bilateral trade currently stands at USD 65.26 billion. The two
began negotiations for a F.T.A. last year.

The Chamber said in the absence of any effective
resolution of issues related to non-tariff barriers faced by
Indian exporters in the E.U., there would not be any
meaningful gains for them from the pact.

Citing R.E.A.C.H. -- Registration, Evaluation,
Authorisation and Restriction of Chemicals Substances --
regulation of the E.U. as an example of non-tariff barrier,
F.I.C.C.I. said one-time cost for complying with it could be
5-10 percent of the turnover of a manufacturer in addition to
significant recurring costs required afterwards.

It was also becoming difficult for Indian exporters to
ship textiles and clothing to the E.U. due to the high tariffs
as well as various certification requirements. In case of
agricultural products, F.I.C.C.I. has sought simplification of
the complex and expensive sampling and testing procedures.

In the area of services as well, the E.U. market was
heterogeneous in regulations and conditions for third
countries' exporters of services.

"Liberalisation of a service market at European
Commission level does not ensure an effective market access
for Indian service providers in individual E.U. countries as
they may be maintaining additional requirements for exceptions
from the E.U. commitments," it said.

The industry body said there was need to have a Social
Security Agreement with the E.U. as well.