India and the EU have a long history of economic cooperation and see each other as natural trading partners given their large economies and shared democratic values. Currently, economic cooperation consists of numerous bilateral agreements covering various sectors. A proposed free trade agreement would further liberalize trade by reducing tariffs on over 90% of goods and opening services markets. This could provide significant benefits to both sides in terms of increased trade, production, and economic growth. However, there are also challenges to finalizing an agreement, including India's concerns about further opening its markets and the EU's demands for greater access to Indian sectors like automobiles and professional services. Overall, the FTA is seen as critical for India to maintain access to European markets as the EU purs

1. CASE
STUD
Y
INDIA-EUROPEAN UNION FREE
TRADE AGREEMENT BENEFITS
& CONCERNS
M V S SAI HEMANT BBA FT IIND SEMESTER 1

2. ARE EU & INDIA
NATURAL &/OR ARE
OBVIOUS TRADING
PARTNERS? JUSTIFY
QUESTION-1
M V S SAI HEMANT BBA FT IIND SEMESTER 2

3. ARE EU & INDIA NATURAL &/OR ARE
OBVIOUS TRADING PARTNERS? JUSTIFY
India- EU relations go back to the early 1960s. India was
among the first countries to establish diplomatic relations
with the (then) EEC. The 1994 cooperation agreement
signed between EU and India took bilateral relations
beyond merely trade and economic cooperation.India-EU
relations have grown exponentially from what used to be a
purely trade and economic driven relationship to one
covering all areas of interaction. The Summit in The
Hague was a landmark Summit, as it endorsed the
proposal to upgrade the India-EU relationship to the level
of a 'Strategic Partnership'.The GOI see it as a qualitative
transformation in the way we engage as equal partners
and work together in partnership with the world at large.
SOURCE:http://commerce.nic.in/trade/India_EU_jap.pdfM V S SAI HEMANT BBA FT IIND SEMESTER 3

4. EU TRADE WITH INDIA
M V S SAI HEMANT BBA FT IIND SEMESTER 4

5. FDI INFLOW TO INDIA FROM EU
YEAR FDI TO INDIA BY EU
IN MILLION USD
1991 165
1992 393
1993 654
1994 1374
1995 2141
1996 2770
1997 3682
1998 3083
1999 2439
2000 2347
2001 3520
2002 3359
2003 2079
2004 3213
2005 4355
2006 11120
2007 15921
2008 37096
2009 27044
2010 21007
2011 34621
2012 22789
M V S SAI HEMANT BBA FT IIND SEMESTER 5

6. FDI INFLOW TO INDIA FROM
EU
M V S SAI HEMANT BBA FT IIND SEMESTER 6

7. FDI OUTFLOW FROM INDIA
TO EU
Increased inflow from developing countries is partially
explained by the well-known investment development
path (IDP) theory by Dunning, which says outward FDI is
undertaken when the country reaches a certain minimum
level of development. As countries move along the IDP from the
initial stage of only receiving inward FDI, domestic firms
acquire ownership and other advantages to go abroad and
the country reaches the final stage and becomes an
important outward investor. Indian outward investors are
investing in a number of developed and developing
countries.
As predicted by IDP theory, Initially Indian Official FDI was
concentrated towards other developing countries. However,
after the year, 2004-05 overwhelming proportions of these
investments are directed to developed countries and the gap
between the two has diverged considerably. Initially, the outflowsM V S SAI HEMANT BBA FT IIND SEMESTER 7

8. FDI OUTFLOW FROM
INDIA TO EU
Indian industrial houses like the Tata group,
Birla, Reliance, Ranbaxy, ONGC, Infosys and etc.
are now more interested in cross-border
acquisitions.
The inclination for cross border acquisitions by
Indian corporate suggests that they have started
bidding for much larger businesses than their own
and for those that are based in high-income
countries.
M V S SAI HEMANT BBA FT IIND SEMESTER 8

9. FDI OUTFLOW FROM
INDIA TO EU
M V S SAI HEMANT BBA FT IIND SEMESTER 9

10. ANSWER
So it is clear that EU and India are trading naturally they
are not in any pressure from any Multilateral agencies i.e.
WTO, world bank group, IMF etc. to perform trade.
Therefore they are Natural and Obvious trading Partners.
According to me yes both EU and India are Natural &
obvious trading partners but the advantages of trade is
not shared equally.
"India and the EU, as the larg e st de m o cracie s in the
wo rld, share co m m o n value s and be lie fs that m ake the m
natural partne rs as we ll as facto rs o f stability in the
pre se nt wo rld o rde r. "
source: http://commerce.nic.in/trade/India_EU_jap.pdf
M V S SAI HEMANT BBA FT IIND SEMESTER 10

11. WHAT KIND OF
ECONOMIC
COOPERATION
EXSISTS TODAY
BETWEEN EU & INDIA?
QUESTION-2
M V S SAI HEMANT BBA FT IIND SEMESTER 11

12. WHAT KIND OF ECONOMIC
COOPERATION EXSISTS TODAY
BETWEEN EU & INDIA?
Over the years, India and the EU have signed a number of
bilateral agreements and MoUs, notably a
1.Science & Technology Agreement (2001, renewed in 2007),
2.Joint Vision Statement for promoting Cooperation in the
field of Information and Communications Technology (2001),
3.Customs Cooperation Agreement (2004),
4.Memorandum of Understanding on Cooperation in Employment and
Social Affairs (2006),
5.Horizontal Civil Aviation Agreement (2008), Joint Declaration in
the field of Education & Training (2008),
6.Joint Declaration on Multilingualism (2009),
7.Agreement in the field of Nuclear Fusion Energy Research (2009),
8.Joint Declaration on Culture (2010), MoU on Statistics (2012),
9.Joint Declaration on Research and Innovation Cooperation (2012)
10.JointDeclaration on Enhanced Cooperation in Energy (2012).
M V S SAI HEMANT BBA FT IIND SEMESTER 12

13. ANSWER
Present scenario of Economic Cooperation between
European Union & India is
development of diverse economic,
scientific,
technological ties among India and groups of EU countries
and between the
socialist and capitalist ,socioeconomic and political
systems,
based on the principles of
independence,
equality, and
mutual advantage. M V S SAI HEMANT BBA FT IIND SEMESTER 13

14. HOW WILL FREE
TRADE AGREEMENT
BE BENEFICIAL FOR
INDIA AND EU?
QUESTION-3
M V S SAI HEMANT BBA FT IIND SEMESTER 14

15. HOW WILL FTA BE
BENEFICIAL FOR INDIA AND
EU?In the recent past, the EU considered the need to build strategic
relationships with emerging economies in trade and investment in
its vision document Europe 2020: A European strategy for smart,
sustainable and inclusive growth. To realize this objective, it
concluded FTAs with Singapore and Korea, and is currently
negotiating FTAs with India, Canada, and Japan and the ASEAN
group.
India has a lot to gain from an FTA with the EU, particularly in
regard to preferential and duty-free access to the European
market. A Sustainability Impact Assessment, commissioned by
the EU, indicates that an extended (broad) FTA (including further
removal of non-tariff barriers to trade harmonization) would result
in significant benefits to both parties in terms of welfare gains,
production, international trade, wage and productivity increases.
The welfare effects amount to an additional 0.3 per cent growth
for the Indian economy in the short run and 1.6 per cent growth in
M V S SAI HEMANT BBA FT IIND SEMESTER 15

16. During the FTA negotiations, both sides have committed
themselves to an ambitious agreement, with tariff elimination on
more than 90 per cent of goods traded and a strong GATS
(General Agreement on Trade and Services) - plus agreement in
services. Most of agriculture will be exempted by mutual
agreement. However, academicians maintain finalizing the India
EU FTA will be a difficult journey because of the high trade-
related regulatory and partial access to some services sectors
such as professional services, financial services, retail and
distribution.
There is a serious doubt among Indian policymakers of any
substantial gain through trade negotiations, as India levies an
average tariff rate of 14.5 percent, whereas the EU’s average
tariff rates are only around 4.1 per cent. Moreover, India has a
negative trade balance with the EU and there is a fear among
industry and non-governmental organizations (NGOs) in India
that this may further worsen after the tariff reductions. Trade
negotiations are not easy for India given its track record of
negotiations with Japan and Korea as the level of
competitiveness differs vastly between emerging and advancedM V S SAI HEMANT BBA FT IIND SEMESTER 16

17. KEY AREAS OF
DISCUSSION
BETWEEN INDIA &
EU
QUESTION-4
M V S SAI HEMANT BBA FT IIND SEMESTER 17

18. 1. INDIA-EU FTA
2. India-EU Trade Economic and Technological
cooperation.
3. Pharmaceuticals and Bio-Technology
4. Finance & Monetary Affairs
5. Environment
6. Information & Communication Technology
7. Transport
8. Agriculture and Marine Working Group
9. Customs Cooperation
10.Employment and Social Policy
11.Science and Technology
M V S SAI HEMANT BBA FT IIND SEMESTER 18

19. MAJOR IMPEDIMENTS
OR OUTSTANDING
ISSUES BETWEEN THE
TWO?
QUESTION-5
M V S SAI HEMANT BBA FT IIND SEMESTER 19

20. MAJOR IMPEDIMENTS OR
OUTSTANDING ISSUES BETWEEN THE
TWO?
MAJORIMPEDIMENTS FORINDIA
Data secure status for the country, liberalized visa norms for
its professionals and market access in services and other
sectors including pharmaceuticals, agricultural produce,
chemicals, textiles, apparels and leather goods. There is
optimism that textiles, apparels and leather goods may get
improved access into the EU and that should help these
industries to expand their operations..
Indian Average Tariff rates are around 14.5% whereas EU's
average Tariff rates are around 4.1%, so tariff reductions in
India will hit the domestic players severely.M V S SAI HEMANT BBA FT IIND SEMESTER 20

21. Indian companies and subcontracting parties have to meet
the cumbersome requirements laid down under the EU
directives on data protection and that increases their cost of
operation. There are some double standards on the part of the
EU in this, as India has amended the Information Technology
Act, 2000 and issued new Information Technology Rules in
2011 which are in line with the safe harbour principles adopted
by the United States, which has been accorded data secure
status.
Lack of harmonisation of qualifications and professional
standards is another problem that restricts the ability of Indian
professionals to access the EU markets.
M V S SAI HEMANT BBA FT IIND SEMESTER 21

22. MAJOROUTSTANDING ISSUES FORINDIA
1.India gets preferential and duty free access to the European Markets.India’s
interests lie in Mode 1 of the BTIA, which covers information technology
enabled services (ITES), business process outsourcing (BPO), and knowledge
process outsourcing (KPO), and Mode 4 which covers movement of skilled
professionals like software engineers.
2.A recent Reserve Bank of India (RBI) survey on computer software and ITES
exports shows that Europe’s share in India’s software exports declined from 27
percent in fiscal 2008 to 20 percent in fiscal 2013. The share of Mode-4
services in overall software service exports declined from 25 percent in fiscal
2008 to 14 percent in fiscal 2013.
3.Improved market access in Mode 4 will allow skilled professionals such as
software engineers to temporarily reside and work in EU countries. The barriers
to Mode 4 include work permits, wage-parity conditions, visa formalities and
non-recognition of professional qualifications.
4.India also seeks a data secure status from the EU, as the high cost of
compliance with existing EU’s data protection laws and procedures rendersM V S SAI HEMANT BBA FT IIND SEMESTER 22

23. MAJORIMPEDIMENTS FOREUROPEAN UNION
The recent EU ban on the import of mangoes from India will further
strain the bilateral commercial relationship, which is already troubled
due to a series of tax disputes involving European companies.
source:http: //the diplo m at. co m /20 1 4/0 6 /whats-ho lding -back-the -india-
e u-fta/
India’s intellectual property regime (IPR) is another impediment. Any
commitment over and above the WTO’s Trade Related Aspects of
Intellectual Property Rights (TRIPS) will undermine India’s capacity to
produce generic formulations. It is feared that data exclusivity
protection measures (which allow pharmaceutical companies to
exclusively retain rights to their test results for a certain period) would
delay the supply of Indian generic medicines.
source:http: //the diplo m at. co m /20 1 4/0 6 /whats-ho lding -back-the -india-
e u-fta/
M V S SAI HEMANT BBA FT IIND SEMESTER 23

24. Again, India has reduced duties on parts and components, and other
vehicles, but maintains high import duties on assembled vehicles: 60
percent (75 percent in cars with a free on board (fob) value above
$40,000 and an engine capacity of 3000 cc for petrol and 2500 cc for
diesel). This protectionism remains the most contentious issue in the
BTIA negotiations.
The EU also seeks deeper cuts in India’s tariffs on wines and spirits.
They feel that high effective duties and additional state-level taxes
inflate the price of imported liquor in India. However duties on wines
and spirits are a critical source of tax revenue for the government.
source: http: //the diplo m at. co m /20 1 4/0 6 /whats-ho lding -back-the -india-
e u-fta/
M V S SAI HEMANT BBA FT IIND SEMESTER 24

25. MAJOROUTSTANDING ISSUES OF EUROPEAN UNION
1.Liberalise its professional services sector, specifically accountancy
and legal services.
2.Access to Indian Market.
3.Reductions in Prevailing Tariffs in different sectors.
so urce : http: //swarajyam ag . co m /e co no m y/india-e u-fta-the -g ains-and-the -
lo sse s/
M V S SAI HEMANT BBA FT IIND SEMESTER 25

26. WHY THIS AGREEMENT IS
CRITICAL TO INDIA
India has higher stakes in getting the agreement in place than the
EU. This is because the EU is partnering the United State for two mega
regional trade agreements, which India is not a part of. The two mega-
regionals are Trans Pacific Partnership (TPP) and Transatlantic Trade
and Investment Partnership (T-TIP). While T-TIP is an agreement
between the United States and the EU, the TPP members include many
countries from the Pacific Rim such as Vietnam, Malaysia, Chile and
Peru.Once these mega regional agreements are finalised, Indian goods
may face difficulties in accessing the European markets. However, with
a separate bilateral trade agreement such as BTIA, Indian exports can
hope to continue getting access. The mega regionals also encourage
creation of global value chains whereby processes are split across
countries to exploit each nation’s competitive edge and thus drive down
costs while raising standards. India has an insignificant role in the value
chains of European companies. The mega regionals can lead to
investment diversion away from non-member countries to
signatories.India could also do with greater flow of investment and
technical cooperation from the EU for many of its development projects.
Many European companies are known to have done pioneering work in
setting up of smart cities. As India plans to develop 100 smart cities,
their assistance would help in planning and execution of these projects.M V S SAI HEMANT BBA FT IIND SEMESTER 26

27. COST BENEFIT
ANALYSIS BETWEEN
EUROPEAN UNION &
INDIA FREE TRADE
AGREEMENT
QUESTION-6
M V S SAI HEMANT BBA FT IIND SEMESTER 27

28. COST BENEFIT ANALYSIS
OF EU-INDIA FTA
India has reduced duties on parts and components, and other vehicles, but
maintains high import duties on assembled vehicles: 60 percent (75 percent in
cars with a free on board (fob) value above $40,000 and an engine capacity of
3000 cc for petrol and 2500 cc for diesel).
My example
>3000 CC car in India i.e. Ford Endeavour 3198 CC
Cost : 23.9-28.5 Lakhs
Now same Ford endevour imported from EU
75% of $40000 + $40000= $70000* 68.54 = INR 47,97,800
Difference= INR 19,47,800
Therefore, in CBA analysis India has benefit in automobile sector which EU
wants to shift it towards itself by entering into Free Trade Agreement with India
M V S SAI HEMANT BBA FT IIND SEMESTER 28

29. SOLUTIONS TO
AREAS OF
CONCERN
QUESTION-7
M V S SAI HEMANT BBA FT IIND SEMESTER 29

30. SOLUTIONS TO AREAS OF
CONCERN
1. Improvement in Indian manufacturing through domestic reforms,
slashing of tariffs and proper government procurement processes.
2. India’s manufacturing sector is still struggling, and providing a more
conducive environment to domestic manufacturers by carrying out
long awaited economic reforms, and addressing regulatory and
governance issues will certainly improve domestic productive
capacities.
3. Launching long awaited economic reforms in India can be an
incentive for EU firms to enter the Indian market. This could offset
the impact of the tapering off quantitative easing, both by the US
Federal Reserve and the European Central Bank by injecting
appropriate capital flows in India.
M V S SAI HEMANT BBA FT IIND SEMESTER 30

31. HAVE THE CONCERNS
RAISED EARLIER BY
VARIOUS STAKEHOLDERS
WITH REGARD TO THE
UNDER NEGOTIATION INDIA
– EU FTA BEEN DULY
QUESTION-8
M V S SAI HEMANT BBA FT IIND SEMESTER 31

32. HAVE THE CONCERNS RAISED
EARLIER BY VARIOUS
STAKEHOLDERS WITH REGARD TO
THE UNDER NEGOTIATION INDIA –
EU FTA BEEN DULY ADDRESSED?
Farm e rs and trade unio ns o f India have be e n pro te sting
ag ainst the unde m o cratic EU India fre e trade ag re e m e nt. O ve r
the last co uple o f m o nths, the alliance o f o rg aniz atio ns calle d
the Anti FTAfro nt has writte n 8 7 2 le tte rs to im po rtant o fficials,
o rg aniz atio ns and po litical partie s including the Prim e Ministe r
and the Me m be rs o f Parliam e nt abo ut this unfair trade de al.
“The re are se rio us im pacts o n fo o d se curity, live liho o d se curity
o f m illio ns o f farm e rs and sm all re taile rs and we have n't e ve n
be e n info rm e d o r co nsulte d abo ut the EUIndia FTA, ”
said Rakesh Tikait of Bhartiya Kisan Union a member of La Via
Campesina.
M V S SAI HEMANT BBA FT IIND SEMESTER 32

33. SHOULD INDIA SIGN
THE DEAL/ NEGOTIATE
FURTHER/ABONDON
IT FOR GOOD?
JUSTIFY
QUESTION-9
M V S SAI HEMANT BBA FT IIND SEMESTER 33

34. SHOULD INDIA SIGN THE
DEAL/ NEGOTIATE
FURTHER/ABONDON IT FOR
GOOD? JUSTIFY
According to me India should sign
the deal
M V S SAI HEMANT BBA FT IIND SEMESTER 34

35. REASON
India has higher stakes in getting the agreement in place than the EU.
This is because the EU is partnering the United State for two mega
regional trade agreements, which India is not a part of. The two mega-
regionals are Trans Pacific Partnership (TPP) and Transatlantic Trade
and Investment Partnership (T-TIP). While T-TIP is an agreement
between the United States and the EU, the TPP members include many
countries from the Pacific Rim such as Vietnam, Malaysia, Chile and
Peru.Once these mega regional agreements are finalised, Indian goods
may face difficulties in accessing the European markets. However, with
a separate bilateral trade agreement such as BTIA, Indian exports can
hope to continue getting access. The mega regionals also encourage
creation of global value chains whereby processes are split across
countries to exploit each nation’s competitive edge and thus drive down
costs while raising standards. India has an insignificant role in the value
chains of European companies. The mega regionals can lead to
investment diversion away from non-member countries to
signatories.India could also do with greater flow of investment and
technical cooperation from the EU for many of its development projects.
Many European companies are known to have done pioneering work in
setting up of smart cities. As India plans to develop 100 smart cities,
their assistance would help in planning and execution of these projects.M V S SAI HEMANT BBA FT IIND SEMESTER 35

36. ROADMAP OF INDIA
- EU ECONOMIC
COOPERATION
QUESTION-10
M V S SAI HEMANT BBA FT IIND SEMESTER 36

37. ROADMAP OF INDIA - EU
ECONOMIC COOPERATION
The EU and India launched a Strategic Partnership in 2004.
It builds on the 1994 Cooperation Agreement on Partnership and
Development.
In this framework, an EU-India Joint Action Plan was adopted in 2005 and
revised in 2008.
It includes a significant research and innovation dimension.
EU and India hope to increase their trade in both goods and services and
investment through the Free Trade Agreement (FTA) negotiations
launched in 2007.
Cooperation between the EU and India in research and innovation is
governed by the Agreement on Scientific and Technological Cooperation
which was concluded in 2001.
In 2012, the Commission published an independent review of the current
agreement. The Agreement for Co-operation between the Government of
India and the European Atomic Energy Community (Euratom) in the fieldM V S SAI HEMANT BBA FT IIND SEMESTER 37

38. India is also a member of ITER. A Joint Declaration on Research and
Innovation Cooperation was signed on 10 February 2012 at the EU-
India Summit which aims at stepping up the cooperation towards
building an Indo-European Research and Innovation Partnership with
(i) larger scale, scope and impact,
(ii) focus on common societal challenges, and
(iii) enhanced synergies between India, the EU and its Member States.
In addition, an EU-India Energy Panel for dialogue and cooperation on
energy issues was set up to promote enhanced cooperation on energy
between EU and India. It aims at improving energy security, safety,
sustainability, access and energy technologies.
In the information and communication technology (ICT) area, the EU-
India Joint ICT Working Group focuses on regulatory matters
(spectrum policy, market access questions and standardisation),
internet security, internet governance, and cooperation in ICT research
and innovation. M V S SAI HEMANT BBA FT IIND SEMESTER 38

39. The European Business and Technology Centre in India (EBTC) created in 2009 has as
objective to facilitate mutual business partnerships and technology transfer between the
EU and India in the focal sectors of Environment, Energy, Biotechnology and Transport –
and having Climate Change as cross-cutting issue.
The EBTC mainly targets EU companies, especially SMEs, and provides services such
as market insight, tender support and incubation services. Finally EURAXESS Links India
is a networking tool for European researchers working in India and Indian researchers
wishing to collaborate and/or pursue a research career in Europe. It provides information
about research in Europe, European research policy, opportunities for research funding,
for international collaboration and for trans-national mobility.
India is currently spending close to 1% of its GDP on R&D (with a share of 28% from the
private sector). During the 11th Plan period (2007-2012), public investment in R&D has
grown at 22% per year.It is the government's commitment to increase India’s R&D
spending to 2% GDP during the 12thPlan period 2012-2017. The total number of Indian
scientific publications almost doubled from 20,514 in 1996 to 40,062 in 2006. This did,
however, only marginally increase India's share in the world output of science
publications from 2.1% in 2000, to 2.3% in 2005. Over the last few years, the number of
scientific publications increased by more than 12% per year against the global average of
4%.
M V S SAI HEMANT BBA FT IIND SEMESTER 39

40. India's developments, such as those in space technology
with capabilities to launch commercial satellites and un-
manned missions to the moon and to Marsnuclear
technology, pharma research capabilities in drug discovery
and commercialization, ICT software, biotechnology in
health and agriculture and the emerging capabilities in
automotive research 29 and telecommunications, have
contributed to the country’s recognition as an important
knowledge power in the global economy. India is also
attracting attention as a vibrant and versatile source of
frugal innovation, a cost effective and inclusive innovation,
leading to affordable products and services without
compromising on quality and environment protection
standards.
M V S SAI HEMANT BBA FT IIND SEMESTER 40

41. BYBY
M V S SAI HEMANTM V S SAI HEMANT
BBA FOREIGN TRADEBBA FOREIGN TRADE
IIND YEAR, 4IIND YEAR, 4THTH
SEMSEM
UPES,DEHRADUN,UPES,DEHRADUN,
UTTARAKHAND, INDIAUTTARAKHAND, INDIAM V S SAI HEMANT BBA FT IIND SEMESTER 41