The negotiations for the much delayed free trade agreement with the EU are unlikely to start soon as it would be difficult for India to move forward on the pact without getting the data secure nation status, a top government source said.
India is asking for data secure nation status from the European Union (EU). The tag is crucial as it will have a bearing on Indian IT companies wanting market access in the 28-nation bloc.
India is among nations not considered data secure by the EU. The EU law mandates that European countries doing outsourcing business with countries that are not certified as data secure have to follow stringent contractual obligations, which increases operating costs and affects competitiveness.
“Data security issue is very important for India. It will be difficult for the Commerce Ministry to move forward on the free trade pact without getting clarity on data security matter,” the source said.
No negotiations were held after both sides failed to bridge substantial gaps on crucial issues in May 2013.
“The EU should come on the table with incremental approach. India could consider their demands of reducing duties on wines, spirits and automobiles,” the source added.
India and EU are negotiating Bilateral Trade and Investment Agreement (BTIA) that will include trade in goods, services and investments since June 2007.
Besides demanding significant duty cuts in automobiles, EU wants tax reduction in wines and spirits and dairy products and a strong intellectual property regime.
The domestic auto industry is concerned that any concessions in the sector on demands by the bloc would have far-reaching consequences for it and have an impact on the Modi government’s Make in India initiative.
Recently, the European Union sought a political push by Prime Minister Narendra Modi to restart the stalled talks for the agreement and had expressed readiness to adopt flexibility to iron out differences on crucial issues. Two-way commerce stood at USD 101.5 billion in 2013-14. 2