India Inc. is opposed to protectionism practised by the European Union (EU) by way of agriculture subsidies and non-tariff barriers on services exports and faces adverse conditions in the European market, especially the pharma and IT sectors, a survey by an industry body has revealed.
The Federation of Indian Chambers of Commerce and Industry (Ficci) survey on India-EU Trade Relations reveals that Indian exporters face the adverse impact of the huge amount of subsidies enjoyed by EU farmers through free seeds and fertilizers and a freight subsidy to producers.
In addition, exporters face cumbersome quality testing which increases the cost for Indian companies. In particular, many mid-sized India pharma companies have been severely hit due to the recent seizure of shipments at transit ports located in the EU, according to the report.
The survey respondents felt that the main impediment in the expansion of services to the EU were visa and consular issues, and non-clarity of taxation and cross-border transaction laws as applicable to Indian service providers.
In the IT sector, companies face difficulties in obtaining work permits for their professionals. While issuing work permits can take time, delays are rarely appreciated by clients in the EU who sign time-bound contracts and expect timely delivery.
Yet, a majority of the respondents said that the EU is a very attractive market and they were planning to expand trade with it in the next two years either by way of exploring new markets within the EU, setting up distribution centres or tie-up with existing market players to have a wider reach in the existing and new markets.
The EU is a strategic trade and Investment partner for India. Commercial interaction between the two nations has grown exponentially since 2000 – with current annual trade being 52 billion euros approximately, growing by more than three times between 2000 and 2008.
But in spite the growing bilateral trade volume, industry is unanimous in its opinion that there still exists a discrepancy between what is projected as an open and uniform regime and what is experienced by Indian companies during their real life interaction with the EU, the industry body said.