Ajay Sahai, Director General & CEO, Federation of Indian Exports Organisation (FIEO) reasons why Indian government needs to aggressively push for the conclusion of India-EU FTA
B&E: Critics argue that through the FTA the European Union is eyeing India’s highly lucrative retail pie and as such the Indian retailers would be on the receiving end. What’s your take?
Ajay Sahai (AS): India is gradually developing into an open-market economy and I don’t think there should be any problem when it comes to opening its doors to the European Union. I am totally in favour of the FTA as it will not only expand our market reach, but will also make us more competitive. If there are certain sectors, which the government feels need protection, then it should surely safeguard their interest. In fact, the FTA needs to be negotiated in that manner.
B&E: Don’t you think that the liberalisation of retail services under the FTA can also put pressure on small farmers’ livelihoods? Not only do big supermarkets ask for very high standards and reject produce on grounds of not meeting that quality, they can gradually take away farmers’ access to local markets. Isn’t it true?
AS: If we are talking within the context of WTO membership, then we are not a signatory to the agreement on government procurement. But if EU wants the government procurement clause to be integrated in this FTA, India needs to be really cautious. The reason is simple. The stakes are indeed high for India as sectors as diverse as railways, energy and telecommunications to construction and health, hitherto reserved for domestic constituencies and used to address economic and social inequalities and to promote domestic growth and development, are slated to be up for grabs by EU firms. Government procurement in India has a social objective and it should be fulfilled at any cost.
B&E: Which sector has a significant upside potential if the India-EU free trade agreement comes into play?
AS: The Indian apparel and textiles industry will see a major boost once the FTA is signed. The EU accounts for about 50% of India’s annual apparel and textiles exports of over $13 billion. Hence, the FTA holds a lot of significance for the domestic textile industry, which at present is outpriced by its less developed counterparts in the region. For instance, apparels produced in India cost around 15-20% more than those produced in Bangladesh. Because of its least developed country status Bangladeshi textiles and apparels enjoy duty-free access to the EU markets, which is not the case with Indian garments. Currently, we are also losing market to China, which will change as soon as the FTA comes into play.
B&E: Critics argue that through the FTA the European Union is eyeing India’s highly lucrative retail pie and as such the Indian retailers would be on the receiving end. What’s your take?
Ajay Sahai (AS): India is gradually developing into an open-market economy and I don’t think there should be any problem when it comes to opening its doors to the European Union. I am totally in favour of the FTA as it will not only expand our market reach, but will also make us more competitive. If there are certain sectors, which the government feels need protection, then it should surely safeguard their interest. In fact, the FTA needs to be negotiated in that manner.
B&E: Don’t you think that the liberalisation of retail services under the FTA can also put pressure on small farmers’ livelihoods? Not only do big supermarkets ask for very high standards and reject produce on grounds of not meeting that quality, they can gradually take away farmers’ access to local markets. Isn’t it true?
AS: If we are talking within the context of WTO membership, then we are not a signatory to the agreement on government procurement. But if EU wants the government procurement clause to be integrated in this FTA, India needs to be really cautious. The reason is simple. The stakes are indeed high for India as sectors as diverse as railways, energy and telecommunications to construction and health, hitherto reserved for domestic constituencies and used to address economic and social inequalities and to promote domestic growth and development, are slated to be up for grabs by EU firms. Government procurement in India has a social objective and it should be fulfilled at any cost.
B&E: Which sector has a significant upside potential if the India-EU free trade agreement comes into play?
AS: The Indian apparel and textiles industry will see a major boost once the FTA is signed. The EU accounts for about 50% of India’s annual apparel and textiles exports of over $13 billion. Hence, the FTA holds a lot of significance for the domestic textile industry, which at present is outpriced by its less developed counterparts in the region. For instance, apparels produced in India cost around 15-20% more than those produced in Bangladesh. Because of its least developed country status Bangladeshi textiles and apparels enjoy duty-free access to the EU markets, which is not the case with Indian garments. Currently, we are also losing market to China, which will change as soon as the FTA comes into play.
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