The India-EU free trade agreement will help attract greater investments into India and boost automobile manufacturing in the country, a senior government official said on Tuesday.
The two sides on Jan. 27 announced the conclusion of negotiations for the trade pact. It may come into force from next year.
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Additional Secretary in the commerce ministry Darpan Jain said the auto sector appeared to be a challenging area during negotiations for the pact as India has high import duties, but the country has converted those challenges into opportunities through the agreement. India has provided quota-based, long-phased solutions in the sector so that there are concessions also to the EU but at the same time the Indian industry also gets adequate protection, Jain said.
"It will result in more investments into India...will result in more manufacturing of automobiles in India and exporting to third countries. So India will be integrated into the EU's value chain," he said here while addressing a conference on India-EU trade agreement, which was organised by industry chamber Ficci.
Prices of imported European cars are widely expected to come down after India agreed to gradually reduce duty under its FTA with the EU to 10% from 110% for 2.5 lakh vehicles a year, over six times more offered to the UK.
On Social Security Agreements (SSAs) with European Union members, Jain said.
India already has this pact with 14 countries out of 27 members.
"Seven we are negotiating and 6 more are being planned," he said.
These pacts help avoid double contribution to social security funds by Indian professionals working for a limited period in the European Union member nations.
These pacts are important as a large number of Indian professionals are working in the EU member states.
"...Many of them work for a specified period of time, sometimes where we do not have SSA, they will have to contribute social security contributions in India also and in member states and they are not able to avail that benefits. So what we have done is we have created a facilitative mechanism to enter into social security agreements with EU member states," he said.
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Jain also said that as the EU has over 40 free trade agreements, involving 70 nations, Indian exporters can benefit from those pacts.
FICCI Secretary General Anant Swarup said the EU alone accounts for about 12% of India's total merchandise trade.
"The task before us is to convert these agreements into practical gains for industry, especially for exporters, MSMEs and service providers," he said.
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