Impediments in Indo-EU trade

By Batuk Gathani

BRUSSELS, NOV. 20. The European Union-India trade summit, to be held this week, has been structured to strengthen Indo-European bilateral dialogue at all levels. The EU is fast emerging as India's largest trading partner with euro 25,661,000 two-way trade last year. It accounts for nearly 30 per cent of Indian exports.

The current two-way trade balance is in EU's favour but the gap is fast narrowing as the figures for six months this year reveal - it is down by nearly 50 per cent.

The EU trade and investment flow to China, however, is six times more than the volume India enjoys. The European officials blame the Indian penchant for conference, summitry and lack of follow- up action for this. The Indian officials are more keen on participating in bilateral dialogues than promoting actual trade and investment, they contend.

Besides political and trade relations, the Indo- European talks have covered issues related to global terrorism, drug trafficking and drug abuse. Discussions on Euro-Indian agreement in science and technology were launched in February 2001 and a new agreement may be signed during the summit in India, a follow-up of the Lisbon summit.

On both sides of the Atlantic, although India is rated as being among the 10 big emerging markets of the world, Indian officials and the business community have so far not impressed overseas investors and manufacturers. In various Indian and global forums, it has been argued that had India played its cards well, it could have created incontrovertible evidence of its capitalising on its favourable factors and outpacing China ``if not in numbers, at least in the relative rate of capital flow.''

According to an Indian observer: ``Not all those manning India's embassies can be said to be adequately articulate or sensitised to their obligations in this respect.'' The Indian industry and business have fared no better except making an impressive dent in the information technology sector, where medium and small companies generate the bulk of the trade. The perennial grievance against New Delhi's bureaucracy is also an inhibiting factor. Despite much talk of `reforms' and `clean-up drives,' efficiency is lacking.

The European and American investors are not impressed by the woefully inadequate and primitive state of supporting infrastructure, rated unequal to the demands of globalisation.

There are obvious gaps in supply of power and road maintenance, and poor railway, port and telecommunication facilities exist.

It remains to be seen how these issues will be addressed at the summit. The European investors note that among the ``big emerging markets,'' India has the largest number of listed stocks of over 4000. Its reputed Securities and Exchange Board reliably monitors the performance of most stocks. All this offers better scope for diversifying risks.

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Section  : International
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