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INDIA-EU Trade Relations

VIEWS: 36 PAGES: 25

									FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY

FICCI CONTRIBUTION Report
for the 12th EU-India Round Table on 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

Prepared by FICCI’s WTO & FTA Division

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 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(AprilDecember)  Exports 10.69 10.16 11.89 14.52 18.25 23.23 26.81 24.40 Imports 10.68 10.65 12.83 15.07 19.30 26.00 29.83 25.66 Total trade 21.37 20.80 24.72 29.59 37.55 49.23 56.64 50.06 Growth(%) in total trade -2.6 18.8 19.7 26.9 31.1 15.1



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 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Trade ($ Billion) 68 79 94 110 129 153 180 213 251 2



Prepared by FICCI’s WTO & FTA Division

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
30,000 25,000 23,229 18,249 14,517 10,695 10,000 5,000 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (AprilDec) 10,155 11,886 26,806 24,403

US $ Millions

20,000 15,000

Source: Ministry of Commerce & Industry, GOI



EU is the largest exporting destination of India’s exports. Share (%) of Countries in India’s Exports (2006-07)

EU 21 .20 ot hers 31

Srilanka Dsr 1 .7 Korea RP 1 .9 Saudi Arab 2 Hong Kong 4 China 6.5 UAE 9.5

USA 1 5

Japan 2.2

Singapore 5

Source: Ministry of Commerce & Industry, GOI



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

Prepared by FICCI’s WTO & FTA Division

3



Average growth rate of India’s exports to EU was 16.1% for the period 200001 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
30 27.29 25 22.13 20 17.05 15 10 10.64 5 0 -5 -10 2000-01 2001-02 -5.04 2002-03 2003-04 2004-05 2005-06 2006-07 15.4 25.13

Source: Ministry of Commerce & Industry, GOI



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 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(AprilDecember) Share (%) 23.9 23.2 22.5 22.7 21.9 22.6 21.2 21.5

Source: Ministry of Commerce & Industry, GOI

Prepared by FICCI’s WTO & FTA Division

4



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 7102 2710 6109 6403 6204 7210 7208 8708 4202 6302 6206 7113 3004 6205 8703 0306 3204 4203 6110 7202 Commodity Diamonds Petroleum oils & etc T-Shirts & other vests, knitted/crocheted Footwear with soles of rubber, plastics etc Women’s/girl’s suits, ensembles, jackets, skirts Flat rolled products of iron/non alloy steel (cld) Flat rolled products of iron/non alloy steel (ht-rolled, nt cld) Motor vehicle’s parts and accessories Bags, suit cases and traveling bags Bed; table; toilet and kitchen linen Women’s blouses, shirts Articles of jewellery Medicaments Men’s/boy’s shirts Motor cars & other motor vehicles Fish products ( Crustaceans) Synthetic organic coloring matter Leather articles and clothing accessories Jersey, pullover, waist-coat etc Ferro alloys Source: UN 2007 2,186.24 1,751.11 962.72 904.49 755.63 650.29 537.73 513.04 484.11 466.14 451.66 425.01 397.72 391.77 363.32 325.88 311.14 303.54 289.72 266.10



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.

Prepared by FICCI’s WTO & FTA Division

5

Table: Share of India in EU’s Import Year 2002 2003 2004 2005 2006 2007 Share (%) 1.64 1.68 1.57 1.80 1.84 1.98
Source: UN

Table: Top 15 Importing Countries in EU in 2007 ($ billion)
Partner
China USA Russian Federation Switzerland Japan Norway Turkey Rep. of Korea Brazil India Libya Canada South Africa Singapore Thailand

Trade Value 235.2 212.3 107.6 91.9 91.3 84.8 45.4 38.1 32.4 29.2 29 26.2 23.8 20.5 17.3 Source: UN

Share (%) 15.94 14.39 7.29 6.23 6.19 5.75 3.08 2.58 2.20 1.98 1.97 1.78 1.61 1.39 1.18

 

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.

Prepared by FICCI’s WTO & FTA Division

6

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
35000 30000 25998 19302 12834 10675 10648 15074 29832

25664

US $ million

25000 20000 15000 10000 5000 0

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

years

Source: Ministry of Commerce & Industry, GOI



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 World
Year World EU 2001-02 1.7 -0.25 2002-03 19.45 20.5 2003-04 27.25 17.4 2004-05 42.7 28.04 2005-06 33.76 34.6 2006-07 24.53 14.7 Source: Ministry of Commerce & Industry, GOI

Table: Growth (%) of India’s Imports from the EU & World
50 40

growth (%)

30 20 10 0 -10 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

years World EU

Source: Ministry of Commerce & Industry, GOI Prepared by FICCI’s WTO & FTA Division

2007-08 (April December)

7



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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(AprilDecember) Share (%) 20.7 20.9 19.2 17.3 17.4 16.1 14.9

Source: Ministry of Commerce & Industry, GOI



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
7102 8802 9999 8517 7204 8411 8479 8483 8419 8414 8708 8481 8529 8474 8413 8536 7208 8504 8445 9018

Commodity Diamonds Other aircrafts(e.g. helicopter, aero planes); space craft and launching vehicles) Commodities not specified according to kind Electrical apparatus for line telephony / telegraphy etc Ferrous waste and scrap, remelting scrap ingots of iron and steel Turbo jet, turbo propellers and other gas turbines Machines and machinery appliances, having individual functions Gears, ball, screws; Bearing housings & other plain shift bearing Machinery plant or laboratory equipments Air or vacuum pumps Parts and accessories of the motor vehicles Taps, cocks and other appliances for pipes, boiler sheets, tanks etc Commodities not specified according to kind Machines for agglomerating , molding solid mineral fuels Pumps for liquids; liquid elevators Electrical apparatus for switching or protecting electrical circuits Iron products (not cld) Electrical transformer, static converters and inductors Machines for preparing textiles fabrics; springs etc Instruments and appliances used in medical surgery , dental etc Source: UN

2007 7,870.16 2,018.95 1,189.54 954.47 626.31 618.66 508.12 482.55 455.07 417.99 391.61 381.66 337.16 327.81 305.21 286.36 282.77 269.66 262.52 256.82



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

Prepared by FICCI’s WTO & FTA Division

8

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 USA Switzerland Russian Federation China Turkey Japan India United Arab Emirates Canada Rep. of Korea Australia Brazil South Africa Saudi Arabia Singapore Trade Value 305.7 112.4 86.7 84.6 51.6 50.3 35.2 30.1 29.8 27.8 26.3 24.1 23.1 22.5 22.3
Source: UN

Share (%) 22.50 8.27 6.38 6.23 3.80 3.71 2.60 2.22 2.20 2.05 1.94 1.78 1.71 1.66 1.64

Prepared by FICCI’s WTO & FTA Division

9

TRADE IN SERVICES

Prepared by FICCI’s WTO & FTA Division

10

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 2007 2008 2009 2010 2011 2012 2013 2014 2015 Exports 9.80 12.74 16.57 21.53 28.00 36.39 47.31 61.51 79.96 Imports 13.06 18.81 27.09 39.01 56.17 80.89 116.48 167.48 241.53

     

Prepared by FICCI’s WTO & FTA Division

11



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

Prepared by FICCI’s WTO & FTA Division

12

INDIA-EU INVESTMENT

Prepared by FICCI’s WTO & FTA Division

13

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) U.A.E Switzerland 590 638 2,563 2,816 4,221 10,227 20,984 0 5,000 10,000 15,000 20,000 25,000

Countries

Japan Singapore USA EU Mauritius

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.

U.A.E, 1.13

Others, 19.77 , Mauritius, 40.05

Switzerland, 1.22 , Japan, 4.89 Singapore, 5.37 USA, 8.06 EU, 19.52

Source: DIPP Prepared by FICCI’s WTO & FTA Division

14



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)
Sector Services sector (Financial & non financial) Computer software & hardware Telecommunications Construction activities Housing & real estate Source: DIPP Cumulative inflows (from April 2000 to January 2008) 9,388 7,122 3,664 2,733 2,167

Ranks 1 2 3 4 5



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 Sector Amount of FDI inflows In US$ Services Sector (Including Financial & Non-Financial) 2 Computer Software & Hardware Automobile Industry (Including 3 Passenger Cars Etc.) 4 Chemicals (Other Than Fertilizers) 5 Electronics Total of above Source: DIPP 1 2,417.32 366.89 359.19 322.68 241.33 3,707.41 35.92 5.49 5.33 4.93 3.83 55.50 Sector’s share in total FDI inflows From E.U



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)
Name of the Indian Company Cairn (I) Ltd Digital Global Soft Ltd. Name of Collaborator/ Country/ Routes Cairan UK Holdings, U.K. Hewlett Packard Leiden B.V. Country: Netherlands Route: Acquisition of shares Castoral Ltd. Route: Acquisition of shares RBI’s Regional Offices Mumbai Amount of FDI inflows Rupees/ (US$) Rs.66,632.4 (US$1,462.8) Rs. 9,505.2 (US$206.6)

Nos. 1.

Sector Business Services Electrical Equipments (including computer software & electronics) Fuels (power & oils refinery)

2.

3.

Castrol India Ltd.

Rs. 8,645.7 (US$192.1)

Prepared by FICCI’s WTO & FTA Division

15

Nos.

Name of the Indian Company

4.

Micro Inks Ltd.

Name of Collaborator/ Country/ Routes MHM Holdings GMBH. Route: Acquisition of shares Ecom Communication Ltd. Horizon (I) BV Netherlands Italy Cementrum I.B.V. Netherlands -

Sector

RBI’s Regional Offices -

Amount of FDI inflows Rupees/ (US$) Rs.8,478.2 (US$191.0)

Chemicals Electrical Equipments (including computer software & electronics) Developing and subdividing real estate into lots Chemicals (other than fertilizers) Transportation Industry Cement & Gypsum Products Fuels (Gas Transmission)

5.

Himachal Futuristic Communication Ltd Emaar MGF Land P. Ltd SAB Miller India Ltd. Fiat India automobiles Pvt Ltd. Mysore Cements Ltd Hazira LNG Pvt. Ltd.

Chandigarh

Rs. 8,103.8 (US$168.8) Rs.6,820.5 (US$150.0) Rs. 5,973.7 (US$129.9) Rs. 4,318.4 (US$100.4) Rs. 3,591.0 (US$79.0) Rs. 3,368.8) (US$73.2)

6. 7.

New Delhi New Delhi

8. 9. 10.

New Delhi Bangalore Ahmedabad

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. 16

 

Prepared by FICCI’s WTO & FTA Division

Table: Growth Rate and Value of India’s Direct Investment in EU Year 2002-03 2003-04 2004-05 2005-06 2006-07  Growth (%) 297.4 -50 265.76 687.3
Source: Ministry of Finance

Value($ million) 83.1 330.15 164.5 600.1 4729.99

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

Others, 50.78 USA, 10.51

Mauritius, 8.23

Russia, 9.08

Source: Ministry of Finance

Prepared by FICCI’s WTO & FTA Division

17

India’s Cumulative Investment to EU Countries (1996-97 to 2006-07) ($ Million) Austria - 79.44 Greece- 0.23 Belgium-182.88 Netherlands1805.41 Bulgaria- 0.28 Hungary- 7.40 Poland - 2.16 Latvia - 0.27 Malta- 96.35

Cyprus- 1361.36 Portugal - 3.01 Czech Republic35.28 Denmark - 25.66 Luxembourg18.259 Romania- 10 .92

France - 114.90

Spain - 13.61

Ireland - 56.52 Finland - 2.44 Sweden - 10.20

Germany - 148.04

Italy- 57.31

U.K. - 2683.30

Prepared by FICCI’s WTO & FTA Division

17

ISSUES

Prepared by FICCI’s WTO & FTA Division

18

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 19

Prepared by FICCI’s WTO & FTA Division



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 redispatching 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. Prepared by FICCI’s WTO & FTA Division 20

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). 21



Prepared by FICCI’s WTO & FTA Division



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).

Prepared by FICCI’s WTO & FTA Division

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