India - European Union Free Trade Agreement: In A Nutshell

20 Oct 2015 7:16 AM GMT
India - European Union Free Trade Agreement: In A Nutshell

There has been lot of developments with respect to India – EU Free Trade Agreement (FTA). The latest development has been that these talks has stalled due to certain measures taken by EU countries on products and services provided by Indian companies. To start with let us not get into the fine details of the FTA. We will answer two questions in this article 1.) What is FTA? 2.) What is India’s/Germany’s gain and fear from this proposed agreement.

Free Trade Agreement
A free trade agreement allows products and services of each country to access the markets of each other countries. For ex, if this FTA goes through, products and services of India could access the markets of Europe and vice versa. It sound’s like win-win, then why the delay over the agreement?

Fear & Gain
Germany fears that accepting India’s demands (liberalizing visa’s for Indians and ITES ) will displace local jobs and result in mass outsourcing.
On the other hand Germany want’s to access to the huge automobile market. Right now the access to this market is limited due to high taxes for foreign assembled cars. Germany also wants seamless import of Wines & Spirits. India fears that acceding to these demands will ruin a burgeoning automobile industry and also adversely affect the state’s earning’s from alcohol .

Conclusion
Yes, both countries have something to gain from the Free Trade Agreement, however history has shown FTA’s have always given the developed countries an upper hand given the vast difference in risk absorbing capacity of India’s & Germany’s indigenous industry. TLI requests the government to take all the time required to negotiate a win-win deal and not to jeopardize the indigenous industries. Speedy decision is the requirement but a wise one.

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