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India-EU FTA talks stuck; insurance could be game spoiler

Talks between India-EU chief negotiators on FTA got stuck with the European bloc making clear that the pact cannot proceed unless the insurance sector was further opened up by New Delhi, which expressed its inability to do so without Parliament approval.
"The first day of talks got stuck on the issue of FDI in the insurance sector. EU is saying that they cannot proceed without India allowing 49 percent FDI in the insurance sector," a source said on Wednesday.

The Indian side, however, has made it clear they cannot move on this front without the approval of Parliament.

The Insurance Laws (Amendment) Bill 2008 that seeks to raise FDI cap from 26 percent to 49 percent is pending before Parliament.

The Indian side also insisted on grant of data secure status toNew Delhi, sources said.

"The EU side would have to take a final call on all vexed issues if they want to continue the FTA talks," the source added.

Although the technical level talks between the two sides started on Monday, the three-day deliberations between the chief negotiators started Wednesday.

India and the 27-nation bloc have been negotiating a Broad-based Trade and Investment Agreement (BTIA) since June 2007, but a breakthrough has not yet been achieved due to strong differences on several of the issues.

Besides significant duty cuts in automobiles, EU is pressing for tax reduction in wines and spirits and dairy products, a hike in FDI cap in the insurance sector and a strong intellectual property regime.

On the other hand, India wants liberalised visa norms for its professionals, data secure status and market access in services and pharmaceuticals sector.

India is among nations not considered data secure by the EU which obstructs flow of sensitive data, such as intellectual property or patient information under data protection laws in the EU.

The EU law mandates that its member-countries doing outsourcing business with nations that are not certified as data secure have to follow stringent contractual obligations which increases operating costs and affects competitiveness.

Negotiations on a number of tracks including trade in goods and services; investment, sanitary and phytosanitary measures (dealing with basic rules for food safety and animal and plant health standards); technical barriers to trade, trade remedies, government procurement, customs cooperation and trade facilitation, dispute settlement, competition and intellectual property rights are underway.

The total trade between India and the EU stood at USD 94.43 billion during April-February 2012-13. It aggregated to USD 109.86 billion in 2011-12.

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