INDIA-EU Trade Relations · Web view(US$79.0) 10. Hazira LNG Pvt. Ltd. - Fuels (Gas Transmission) Ahmedabad Rs. 3,368.8) (US$73.2) Source: DIPP Top 10 Investing companies of EU countries

FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY

FICCI CONTRIBUTION

Reportfor the

12th EU-India Round Tableon

India-EU Trade and Investment- Current Status & Issues_____________

Indian Rapporteur: Mr Amit MITRA_____________

Prepared by FICCI’s WTO & FTA Division

CONTENTS

Page No.

India-EU Merchandize Trade 2

India’s Merchandize Exports to EU 3

India’s Merchandize Imports from EU 7

India-EU Trade in Services 11

EU’s Investment in India 14

India’s Investment in EU 16

India’s Trade & Investment Issues with EU 19


TRADE IN GOODS

Prepared by FICCI’s WTO & FTA Division 1

Key Features of India’s Total Merchandise Trade with EU

India’s engagement with EU in trade in goods has increased by 2.7 times between 2000 and 2007. Currently, India’s annual trade with EU is to the tune of $56.6 billion. Already, in the first nine months of 2007-08, the trade has touched $50 billion and is expected to touch $68 billion for 2007-08.

EU is India’s largest trading partner.

Table: India’s Exports & Imports with EU ($ Billion)

Year Exports Imports Total trade Growth(%) in total

trade2000-01 10.69 10.68 21.372001-02 10.16 10.65 20.80 -2.62002-03 11.89 12.83 24.72 18.82003-04 14.52 15.07 29.59 19.72004-05 18.25 19.30 37.55 26.92005-06 23.23 26.00 49.23 31.12006-07 26.81 29.83 56.64 15.12007-08(April-December) 24.40 25.66 50.06

Source: Ministry of Commerce & Industry, GOI

Although, growth rate of trade was negative in 2001-02, but it grew to 18.8 % in 2002-03. Growth rate has then been increasing and it reached 31.1 % in 2005-06. But it has fallen again to 15.1% in the year 2006-07. Average growth rate for this period is 18% for the overall trade in goods with EU.

At the existing average growth rate, bilateral trade is expected to cross $110 billion by 2010 and $250 billion by 2015 i.e. after implementation of FTA in Goods.

Table: India’s Projected Trade with EU ($ Billion)

Year Trade ($ Billion)2007-08 682008-09 792009-10 942010-11 1102011-12 1292012-13 153


2013-14 1802014-15 2132015-16 251

India’s Merchandize Exports to EU

India’s exports to EU were $26.8 billion in 2006-07 and it has already reach $24.4 billion for 2007-08 (April-December). Exports have grown by 2.64 times in 2006-07 over 2000-01. In 2000-01, India’s exports to EU were $10.6 billion.

Graph: India’s Exports to EU

24,403

10,695 10,15511,886

14,517

18,249

23,229

26,806

0

5,000

10,000

15,000

20,000

25,000

30,000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-Dec)

US

$ M

illio

ns


EU is the largest exporting destination of India’s exports.

Share (%) of Countries in India’s Exports (2006-07)

Hong Kong4J apan

2.2Singapore

5

Saudi Arab2

Srilanka Dsr1.7

China6.5

UAE9.5

USA15

EU21.20

others31

Korea RP1.9



EU accounts for 21% share in India’s total exports, followed by US (15 %), UAE (9.5%) and China (6.5%).

Average growth rate of India’s exports to EU was 16.1% for the period 2000-01 to 2006-07. India’s export to EU increased at a high rate of over 20% for three consecutive years i.e. between 2003-2005.

Graph: Growth in India’s Exports to EU

10.64

17.05

22.1325.13

27.29

15.4

-5.04

-10

-5

0

5

10

15

20

25

30

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07


The share of EU in India’s total exports has fallen down to 21.2% in the year 2006-07, while it was 23.9% in year 2000-01. However, the share has increased by 0.3% and has reached to 21.5% for 2007-08 (April-December).

Table: Share (%) of EU in India’s Total Export

Year Share (%)2000-01 23.92001-02 23.22002-03 22.52003-04 22.72004-05 21.92005-06 22.62006-07 21.2

2007-08(April-December)

21.5



India’s top 20 items of exports to EU in 2007 at HS 2 digit level are shown below.

Table: India’s Top 20 Exports to EU ($ million)

HS Code Commodity 2007

7102Diamonds 2,186.2

4

2710Petroleum oils & etc 1,751.1

16109 T-Shirts & other vests, knitted/crocheted 962.726403 Footwear with soles of rubber, plastics etc 904.496204 Women’s/girl’s suits, ensembles, jackets, skirts 755.637210 Flat rolled products of iron/non alloy steel (cld) 650.29

7208Flat rolled products of iron/non alloy steel (ht-rolled, nt cld) 537.73

8708 Motor vehicle’s parts and accessories 513.044202 Bags, suit cases and traveling bags 484.116302 Bed; table; toilet and kitchen linen 466.146206 Women’s blouses, shirts 451.667113 Articles of jewellery 425.013004 Medicaments 397.726205 Men’s/boy’s shirts 391.778703 Motor cars & other motor vehicles 363.320306 Fish products ( Crustaceans) 325.883204 Synthetic organic coloring matter 311.144203 Leather articles and clothing accessories 303.546110 Jersey, pullover, waist-coat etc 289.727202 Ferro alloys 266.10

Source: UN

Together, these 20 items constitute 43.57% of India’s total exports to EU and broadly they belong to the following sectors:

Petroleum Oil Textile & Clothing, Leather Gems & Jewellery Metal & Products Vehicles & Accessories

EU remains the top destination for some of our major exporting items as highlighted below:

EU has a noteworthy share of 42% in item HS 6204 (women’s/ Girls’ suits, ensembles, jackets, dresses, skirts, trousers, bib, & brace ovrals, brechs & shorts etc) which was India’s one of the top exporting items to the world. Similarly, EU’s share in India’s exports of Petroleum oil (HS 2710) and Diamond (HS 7102) to the world was 10.8% and 15.4% respectively.

India stands at the 10th position amongst the top importing partners in EU but its share is only 1.98% in EU’s world imports.


Table: Share of India in EU’s Import

Year Share (%)2002 1.642003 1.682004 1.572005 1.802006 1.842007 1.98

Source: UN

Table: Top 15 Importing Countries in EU in 2007 ($ billion)

PartnerTrade Value Share (%)

China 235.2 15.94USA 212.3 14.39Russian Federation 107.6 7.29Switzerland 91.9 6.23Japan 91.3 6.19Norway 84.8 5.75Turkey 45.4 3.08Rep. of Korea 38.1 2.58Brazil 32.4 2.20India 29.2 1.98Libya 29 1.97Canada 26.2 1.78South Africa 23.8 1.61Singapore 20.5 1.39Thailand 17.3 1.18

Source: UN

India has moved up in the ranks in terms of EU’s top importing partner. Its rank was 14th in 2002.

India did not have significant share in some of the largest importing items of EU in 2006-07, as shown below:

India exported $18.3 billion of petroleum oil (HS 2710) to the world in the year 2006-07. And EU imported $113 billion of petroleum oil from world in 2007 which was its 5th largest imported product from the world. But India’s export to EU of petroleum oil was just $1.59 billion.

Medicaments (HS code 3004) was the fifth largest exported item of India in the year 2006-07 and also one of the top commodity imported by EU for the year 2007. However, India’s export to EU was just $375 million in the same year. EU’s total imports of medicaments was $114 billion for 2007. India exported $2.6 billion of this


item to the world in 2006-07. Therefore, India’s share in EU’s import remains small.

India’s Merchandize Imports from EU

India’s imports from EU were $29 billion in 2006-07, and it has grown by over 190% vis-à-vis 2000-01($10 billion). Trade deficit of India vis-à-vis EU has increased over the period. The deficit was $492.63 million in the year 2001-02 and it has increased to $3 billion in 2006-07. Imports from EU have already cross $25 billion for the period April-December, 2007-08.

Graph: India’s Imports from EU

29832

25998

1930215074

128341064810675

25664

0

500010000

15000

20000

2500030000

35000

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

(Apr

il -

Dec

embe

r)

years

US

$ m

illio

n


Average growth rate of India’s Import from EU for the years 2001-02 to 2006-07 has been 19.1%.

Table: Growth (%) in India’s Imports from EU and WorldYear World EU

2001-02 1.7 -0.252002-03 19.45 20.52003-04 27.25 17.42004-05 42.7 28.042005-06 33.76 34.62006-07 24.53 14.7



Table: Growth (%) of India’s Imports from the EU & World

-10

0

10

20

30

40

50

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

years

grow

th (%

)

World EU


As it can be seen the growth rate of imports from EU is lagging behind than that of imports from the world. Therefore, the share of EU in India’s total import has declined significantly over the period.

Table: Share (%) of EU in India’s Import

Year Share (%)2001-02 20.72002-03 20.92003-04 19.22004-05 17.32005-06 17.42006-07 16.1

2007-08(April-December)

14.9


Together the top 20 items account for 57.4% of imports from EU in India.

Table: Top 20 Import Items from EU ($ Million)

HS Code Commodity 2007

7102Diamonds 7,870.1

6

8802Other aircrafts(e.g. helicopter, aero planes); space craft and launching vehicles)

2,018.95

9999Commodities not specified according to kind 1,189.5

48517 Electrical apparatus for line telephony / telegraphy etc 954.477204 Ferrous waste and scrap, remelting scrap ingots of iron and steel 626.318411 Turbo jet, turbo propellers and other gas turbines 618.668479 Machines and machinery appliances, having individual functions 508.128483 Gears, ball, screws; Bearing housings & other plain shift bearing 482.558419 Machinery plant or laboratory equipments 455.078414 Air or vacuum pumps 417.998708 Parts and accessories of the motor vehicles 391.61


8481Taps, cocks and other appliances for pipes, boiler sheets, tanks etc 381.66

8529 Commodities not specified according to kind 337.168474 Machines for agglomerating , molding solid mineral fuels 327.818413 Pumps for liquids; liquid elevators 305.218536 Electrical apparatus for switching or protecting electrical circuits 286.367208 Iron products (not cld) 282.778504 Electrical transformer, static converters and inductors 269.668445 Machines for preparing textiles fabrics; springs etc 262.529018 Instruments and appliances used in medical surgery , dental etc 256.82

Source: UN

EU’s high share in India’s imports is reflective of its significant share in India’s top imported items. For instance:

1) Aircrafts (HS 8802) - India’s total import from world of this material was $4354 million for the year 2006-07 and from EU $2224.52 million was imported in the year 2006; which implies a share of 51.1%. Also, this being a top exporting item of EU for the year 2006 ($24.1 billion of exports of EU).

2) Machines & its appliances (HS 8479) - $350 million was imported from EU and EU’s export to the world was $24 billion. India’s total import of this product from the world was $ 852.81 million in the year 2006-07, thus approximately 42% was imported from EU.

3) Electrical machinery and equipments (HS 8524) - $1071 million was imported from world and $570.84 was imported form EU. And EU’s total export of this item in 2006 was $14 billion.

4) If intra-EU exports are excluded, then India ranks 7th in terms of EU’s export to other countries for the year 2007.

Table: Share of Different Countries in EU’s Exports in 2007 ($ Billion)

Partner Trade Value Share (%)USA 305.7 22.50Switzerland 112.4 8.27Russian Federation 86.7 6.38China 84.6 6.23Turkey 51.6 3.80Japan 50.3 3.71India 35.2 2.60United Arab Emirates 30.1 2.22Canada 29.8 2.20Rep. of Korea 27.8 2.05Australia 26.3 1.94Brazil 24.1 1.78South Africa 23.1 1.71Saudi Arabia 22.5 1.66Singapore 22.3 1.64


Source: UN


TRADE IN SERVICES


India- EU Trade in Services

India’s share of total trade in services of EU is just 1.4%, with the largest partner of EU being U.S in service trade.

India and EU’s share (excluding Intra EU) in world commercial services trade was 3.4% and 25.7% respectively in 2006.

India exported $5.8 billion of services to EU during the year 2005 however EU’s total import was $427 billion, implying that India’s share was just 1.3% in EU. India’s total export of services to the world was $56.1 billion in 2005. Share of EU in India’s export of services to the world was 10.4%.

India imported $6.3 billion services from EU which accounts for 1.27% share of EU’s total exports of services to the world.

For 2003-05, the growth in India’s export of services to EU was less than its imports from EU for the same period.

Annual percentage change of India’s imports of services from EU for the period 2003-05 was 44%.

Annual percentage change of India’s exports of services to EU for the period 2003-05 was 30%.

India was a net exporter of services to EU in 2004. But in 2005, India became net importer of services from EU.

Total bilateral trade in services is expected to cross $ 320 bn by 2015 by the time FTA in Services is implemented.

Table: India’s projected Trade of services with EU ($ Billion)

Year Exports Imports2007 9.80 13.062008 12.74 18.812009 16.57 27.092010 21.53 39.012011 28.00 56.172012 36.39 80.892013 47.31 116.482014 61.51 167.482015 79.96 241.53


Services of export interest to India in EU market are :

IT services & BPO Health Services (including doctors,

nurses, telemedicine, etc) Engineering services (including

consultancy) Architectural services Banking services Audio – Visual services

Services of interest to EU in India are :

Banking & insurance Retail Telecommunications Education Environmental services Legal Services


INDIA-EU INVESTMENT


EU’s Investment in India

EU is an important source of FDI for India. EU accounts for about 19.5% of total India’s FDI inflows.

In terms of Cumulative FDI inflows to India since April 2000, EU ranks 2nd.

In 2007, EU’s investment in India rose by 266.66% from 2006. EU invested $ 13.9 billion in 2007. Whereas, EU’s total investment in China was only $2.56 billion in 2007.

Graph: Country-wise Cumulative FDI Inflows in India (From April 2000 to January 2008) ($ Million)

Cumulative FDI (from April 2000 to January 2008)

20,984

10,2274,221

2,8162,563

638590

0 5,000 10,000 15,000 20,000 25,000

Mauritius

EU

USA

Singapore

Japan

Switzerland

U.A.E

Coun

tries

Cumulative FDI (From April 2000 to Januray 2008)

Source: DIPP

Share (%) of EU and other top Countries in Cumulative FDI Inflows since April 2000 to January 2008.

,

EU, 19.52

,

Mauritius, 40.05

USA, 8.06

Singapore, 5.37

Switzerland, 1.22

Others, 19.77U.A.E, 1.13

Japan, 4.89


Source: DIPP

Top 5 sectors attracting FDI in India from all the countries are services sector, electrical equipments, telecommunications, transportation industry and fuels (power & oil refinery).

Table: Top 5 sectors attracting FDI in India ($ Million)Ranks Sector Cumulative inflows

(from April 2000 to January 2008)

1 Services sector (Financial & non financial) 9,3882 Computer software & hardware 7,1223 Telecommunications 3,6644 Construction activities 2,7335 Housing & real estate 2,167

Source: DIPP

And top 5 five sectors attracting FDI inflows in India from EU are Services sector , Computer software & hardware, automobile industry, chemicals (other than fertilizers) and electronics.

Table: Top 5 Sectors Attracting FDI Inflows from EU

(From January 2000 to June 2007)

Ranks SectorAmount of FDI inflows

Sector’s share in total FDI

inflowsFrom E.U

In US$

1Services Sector(Including Financial & Non-Financial)

2,417.32 35.92

2 Computer Software & Hardware 366.89 5.493 Automobile Industry (Including

Passenger Cars Etc.) 359.19 5.334 Chemicals (Other Than Fertilizers) 322.68 4.935 Electronics 241.33 3.83Total of above 3,707.41 55.50

Source: DIPP Some of the leading EU companies of the world that have invested in India are Cairn, Castrol, Fiat, etc.

Table: Top 10 FDI Inflows Received from EU Countries through Indian Companies (from January 2000 to June 2007)

Nos. Name of the Indian Company

Name of Collaborator/

Country/Routes

SectorRBI’s

RegionalOffices

Amount of FDI inflows

Rupees/(US$)

1. Cairn (I) Ltd Cairan UK Holdings, U.K. Business Services Mumbai

Rs.66,632.4(US$1,462.8

)

2.Digital Global Soft Ltd.

Hewlett Packard Leiden B.V.Country:NetherlandsRoute: Acquisition of shares

Electrical Equipments (including computer software & electronics)

Rs. 9,505.2(US$206.6)


Nos. Name of the Indian Company

Name of Collaborator/

Country/Routes

SectorRBI’s

RegionalOffices

Amount of FDI inflows

Rupees/(US$)

3. Castrol India Ltd. Castoral Ltd.Route: Acquisition of shares

Fuels (power & oils refinery)

Rs. 8,645.7(US$192.1)

4. Micro Inks Ltd.MHM Holdings GMBH.Route: Acquisition of shares

Chemicals -Rs.8,478.2

(US$191.0)

5.Himachal Futuristic Communication Ltd

Ecom Communication Ltd.

Electrical Equipments(including computer software & electronics)

Chandigarh

Rs. 8,103.8(US$168.8)

6. Emaar MGF Land P. Ltd

Horizon (I) BV Netherlands

Developing and subdividing real estate into lots

New Delhi Rs.6,820.5(US$150.0)

7. SAB Miller India Ltd. -

Chemicals (other than fertilizers)

New Delhi Rs. 5,973.7(US$129.9)

8.Fiat India automobiles Pvt Ltd.

-

ItalyTransportation Industry New Delhi Rs. 4,318.4

(US$100.4)

9. Mysore Cements Ltd

Cementrum I.B.V. Netherlands

Cement & Gypsum Products Bangalore Rs. 3,591.0

(US$79.0)

10. Hazira LNG Pvt. Ltd. -

Fuels (Gas Transmission)

Ahmedabad

Rs. 3,368.8)(US$73.2)

Source: DIPP

Top 10 Investing companies of EU countries (from August 1991 to June 2007) :

HFCL Bezeq Telephone Ltd FIAT India Automobiles Ltd Energy works (C.I.) L.L.C. Taj Telephone and Cables Ltd. U.K. ICICI Venture Funds management Co Ltd Tractable S.A. Belgium Holdcem Cements P. Ltd Consolidated Electric Power Urban Infrastructure venture Capital Ltd. Coco-Cola South Asia Holding Inc.

EU has been granted 3,734 technical collaborations (47.42% of the total) since 1991. Total (overall) technical collaborations during the last sixteen years were 7,874.

India’s Investment in EU

India’s cumulative direct investments in joint ventures and wholly owned subsidiaries in EU (from April 1996 to 2006-07) were $6715.305 million; making it the largest destination of overseas investment of India.


Overseas investments to EU grew by 266% in 2005-06 and 687% in 2006-07.

India’s overall investment in EU was $12.19 billion in 2007, exceeding Canada, Russia, China and Brazil.

Table: Growth Rate and Value of India’s Direct Investment in EU

Year Growth (%) Value($ million)2002-03 83.12003-04 297.4 330.152004-05 -50 164.52005-06 265.76 600.12006-07 687.3 4729.99

Source: Ministry of Finance

Amongst the EU countries, UK received the highest Indian investment. London is the biggest source of destination for FDI among European cities. Indian companies are second only to US firms in the number of projects being executed in London.

For the year 2006-07, $15 billion of overseas Indian investment has been approved. Among the sectors, non financial services accounts for 54.56% and manufacturing accounts for 25% of the total amount. EU‘s share in India’s total overseas investment was 19.87% for the year 2006-007.

Share (%) of Countries in India’s Investment (1996-2007)

EU, 21.4

USA, 10.51

Russia, 9.08

Others, 50.78

Mauritius, 8.23

Source: Ministry of Finance


India’s Cumulative Investment to EU Countries (1996-97 to 2006-07) ($ Million)


Austria - 79.44

Bulgaria- 0.28

Czech Republic- 35.28

Denmark - 25.66

Finland - 2.44

Germany - 148.04

Belgium-182.88

France - 114.90

Malta- 96.35

Poland - 2.16

Portugal - 3.01

Romania- 10 .92

Sweden - 10.20

U.K. - 2683.30

Netherlands- 1805.41

Spain - 13.61

Cyprus- 1361.36

Greece- 0.23

Ireland - 56.52

Hungary- 7.40

Italy- 57.31

Luxembourg- 18.259

Latvia - 0.27

17

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ISSUES


Issues Related to India-EU Bilateral Trade & Investment

EC Regulations on REACH

Indian exporters are apprehensive of the implications of REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals Substances) on their market access for chemicals, dyes etc in EU. Under these regulations, each and every chemical to be imported into EU has to be registered in advance and the cost of this registration could be several lacs of Rupees. This cost is prohibitive for small and medium exporters and would make the products of large producers also uncompetitive in EU market.

It is requested to EU side that transition period for introducing such legislation should be managed such that bilateral trade is not disturbed. Or EU may have a system like TSCA (Toxic Substances Control Act 1976), in US, where once the product is registered with any manufacturer, other exporters can export similar products provided it conforms to that description. In the meantime, there is a need for building up the compliance capacities of Indian exporters. REACH would come into effect from June 2008.

Harmonization of Micro-Biological Standards

Microbial Standards and also the method of inspection and tests are not harmonized across the EC. For instance, none of the importing countries in EU have specified limit for vibrio parahaemolyticus in raw products. Standards for micro-organism have been laid-out only in ‘ready to eat cooked products’ or ‘seafood for raw consumption’. Here also different limits are specified in different EU countries, ranging from 1,000 to 10,000 per gram. EC needs to harmonize micro-biological standards so as to alleviate the difficulties faced by exporters.

Certificates Required for Fruits

Concerns of Indian exporters of fruits relate to number of product and process standards that need to be complied with for exporting to EU. Listed below are the standards or certifications required for an Indian exporter of IQF (Individually Quick Frozen) fruits like mango, papaya, pineapple and canned mango pulp. Following are the certifications required :

EC Regulation for MRLs (Maximum Residue Limit) for Pesticides


British Retailer Consortium (BRC) Certification

HACCP Certification Kosher Certification ISO 9001 Certification

The cost of getting all these certificates is prohibitive not only for the small exporters but even for large exporters.

Aflatoxin Limits in Groundnuts

The maximum limits for aflatoxin in groundnuts meant for direct consumption or further processing prescribed by EU are unjustifiably low in relation to consumer aflatoxin exposure and the potential risk.

India considers the maximum limits for aflatoxins in groundnuts meant for direct consumption {4ppb} and for further processing {15ppb} to be unjustifiably low in relation to potential risk. In our view these limits are not justified by scientific evidence. Since EU is not a groundnut producing country, the limit for direct consumption should be raised to reflect internationally accepted limits in producing countries.

Destruction of Export Consignments

Indian exporters have been facing difficulties, especially in UK, due to destruction of consignments, which are found to be not conforming to EC standards. Commission Decision 2005/34/EC on Minimum Required Performance Limits (MRPL) for certain residues, allows for the re-dispatching of consignments containing prohibited or non-authorized substances at levels above the MRPL under certain conditions.

However, there have been instances in the recent past, when two consignments of fish and fishery products exported to UK through Southampton port have been destroyed due to presence of nitrofurans metabolites above MRPL.

Traditional Indian System of Medicine

In 2004, EU had issued a Directive under which companies wanting to export traditional herbal medicines to EU must submit evidence to prove that the product has been under medicinal use for at least 30 years preceding the date of application, including 15 years in EU. As Indian traditional medicines were not allowed to be imported in EU earlier there is no way that these conditions could be met by suppliers of Indian traditional medicines like Auyrveda.


CE Marking

CE marking, the mandatory conformity mark to ensure compliance with various health and safety standards as required by EU, for various equipments and components is difficult to comply with for Indian exporters. Not only it involves more cost but also time, as not enough testing bodies are there in India to certify the product as CE Mark compliant.

Milk Exports

Delay in granting approvals to certain Indian milk product units by EC, is hampering the exports of dairy products (like Mozzarella Cheese) to EU countries. EC needs to expedite the process of approval of Indian units.

Notification of Approved Fishery Units

In the fishery sector, Export Inspection Council (EIC) of India (the notified agency) proposes names of new units for approval by the EC quite often. On submission of the new names, the EC takes about one and half to two months for its notification. When one set of names are in the process of notification, the EC does not take up new names for notification. It is not possible to coordinate the timing of approval in India and EC. The result is that the notification of units often gets delayed by quite a few months till the EC completes the procedure already under way.

Rapid Alert Notifications System and System for Lifting of Alert

While the system of issuing the alert is streamlined, that of lifting the alert is not in EU. The Rapid Alert regulations are silent about lifting of the alert by Member States. In practice, some Member States like UK, Italy, Spain, Portugal and Germany are demanding 10 subsequent clean consignments (of the same product) while France requires only 3 consignments before lifting the alert. The system of lifting of the alert is needs to be harmonized across EU.

Tariffs on Textiles & Apparels

While EU maintains low tariffs on products lower down the textile value chain like cotton fibre/yarn etc but it maintains higher tariffs on value added products like fabrics and garments. For instance, EU tariff on Cotton (HS 5201) is 0% whereas tariff is 8% on Woven fabric of cotton and 12% on apparels. This discourages the value addition in the exporting country.


Visa

It is very difficult to get long-term business visa in EU. This creates a lot of problem as every time one has to apply afresh even if one is going for a few days only. EU should consider granting long-term business visa or visa on arrival for business travelers.

Also, for service providers a separate visa category is required which is different from the normal immigration visa. If one is having the contract for work in EU, then one should be given faster and a service provider visa (SPV).

In EU, for intra-corporate transfer of employees, India business seeks a visa like L-1 visa as issued by US authorities, which allows foreign companies in US to transfer their employees in US for up to seven years. This is for the intra-corporate transfer of employees within EU.

Barriers to Supply of Services

Number of conditions restrict the supply of services in EU market – Nationality, Residency, Wage-Parity, Economic Need Tests (ENTs) all restrict the supply of services by our professionals in the following areas :

Health Services Engineering Services IT Services Architectural Services

In UK, prior to contracting with any hospital, regardless of its location, Department of Health-UK needs to determine whether a set of prescribed criteria is met. These include quality of the care and follow-up care on offer, available accommodation, time, ease and effect of the modes of travel required from the local UK base and cost. As a general rule (based on clinical advice) the Department regards three hours air travel as being the absolute maximum, which automatically precludes the chances of large number of UK patients getting treated in India. The majority of these referrals have been for orthopedics and some cardiac procedures. Indian service suppliers can offer these patients good value for their money if the flying time condition is removed by UK authorities.

Recognition of Qualifications / Work Experience


Qualifications acquired by our professionals are not given due recognition by the EU for providing service. Recognition of qualifications is a pre-condition for the movement of service supplier from one country to another. Professional associations (like in Medical, Engineering etc) on both sides need to conclude Mutual Recognition Agreements (MRAs) for qualifications to facilitate trade through Movement of Natural Persons.

VAT

For any work done by Indian company locally in Europe, VAT has to be paid, which is not refundable even if the billing is done on the company in India. Whereas, the local business enjoy the set-offs against VAT (for instance, in case of insulation job done in EU by Indian company, VAT is paid even if it is billed to Indian address).


Documents

INDIA-EU Trade Relations · Web view(US$79.0) 10. Hazira LNG Pvt. Ltd. - Fuels (Gas Transmission) Ahmedabad Rs. 3,368.8) (US$73.2) Source: DIPP Top 10 Investing companies of EU countries