EU dangles visa hopes for India to open up insurance, govt procurement

The European Union has offered to convince member states to commit more visas for Indian professionals if only India opens up its insurance and government procurement to EU businesses and lowers duties on alcohol and automobiles, as part of the proposed bilateral free trade agreement (FTA).

But both the EU and India knows well that with the Indian government facing an election next year and EU bound for a leadership change, an EU-India FTA is unlikely in the near future.

Brussels has almost given up on a trade pact with India in the near future and the 27-member union does not expect to extract concessions from India right now.

India, which has been seeking freer movement of its professionals, has been upset with the 27-member trade bloc for introducing a clause limiting visa benefits for professionals.

While the EU had offered 40,000 additional professional visas every year, it also recently introduced a caveat allowing members to impose curbs once 20 per cent of individual country quota is breached.

New Delhi also wants the EU to recognize India as a data secure country so as to attract more offshore business from Europe.

The India-EU bilateral trade talk, formally known as the Broad-based Trade & Investment Agreement (BTIA), is stuck as both the Indian government and EU officials and parliamentarians have failed to iron out the differences.

The EU officials have little hopes on the Indian Parliament taking up the Insurance Bill in the winter session. It would then take another three years before the two sides get another opportunity to reach a deal.

India's Insurance Bill proposes to raise FDI limit in the insurance sector to 49 per cent from the present 26 per cent. Even if the bill gets passed, it is unlikely that the government would make binding commitments not to roll back the policy later, if needed.

On the issue of import duties on automobiles and alcohol, India has already offered to effect substantial cuts and EU may find it difficult to improve on it.

India's public procurement policy, which is loaded in favour of domestic suppliers is the biggest stumbling block as far as the EU side is concerned.

The EU region is India's third-biggest trading partner, after Northeast Asia and West Asia with total trade in excess of $100 billion, nearly 13 per cent of India's total trade.

The BTIA is expected to create additional markets that would almost double bilateral trade to an estimated €150 billion ($200 billion) from about $110 billion last year.