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Expanded EU to bring opportunities, challenges
Tuesday, 04 May 2004, 19:30 IST
NEW DELHI: With 10 new members joining the 15-member European Union, India's $24-billion bilateral trade with its largest trading partner is set to get a further boost in the coming years, analysts say.
Yet, they warned, the preferential, intra-country tariff regime and high quality standards within the trade bloc remained a cause for worry, particularly for Indian exports of textiles, leather, jute and chemicals.
"The EU expansion is mixed baggage," said Nagesh Kumar, director general of Research and Information System (RIS) for the Non-Aligned and Other Developing Countries.
"The potential advantage of a bigger, expanded market would be diluted by the fact that labour-intensive goods from India would be at a disadvantage as new member countries would enjoy duty-free access," Kumar told IANS.
But at the Delegation of the European Commission in India, the mood has been only upbeat. "This is history in the making," said Ambassador Francisco da Câmara, head of the delegation.
Countries like India will benefit from the 20-percent addition to the EU's population of 379 million that has created an even larger market of 455 million people, he said.
Indian exporters will also benefit from the lowering of the average tariff of the 10 new members from their current level of nine percent to the trade bloc's level of three percent under Community Common Customs Tariff, he added.
Starting with six nations, the European Union has now expanded to 25 members, with eight states from central and eastern Europe and two Mediterranean islands joining the grouping May 1.
The new members are the Czech Republic, Latvia, Estonia, Lithuania, Poland, Hungary, Slovakia, Slovenia, Malta and Cyprus.
With this, the union's gross domestic product has also expanded five percent to $8,102 billion, accounting for 18 percent of the world trade, Gomes said.
The PHD Chamber of Commerce and Industry (PHDCCI), which recently concluded a study on the impact of India-EU trade and economic relations following the expansion, expressed some apprehensions.
It said Indian exports to the 10 new members of EU would now have to achieve the high standards of the trade bloc that is tougher than even those of the US.
Inter-country preferential tariffs would particularly hit Indian exports of textiles, leather, jute and chemicals, said the chamber's president Ravi Wig.
A similar study by the Federation of Indian Chambers of Commerce and Industry (FICCI) said the EU's enlargement could give a good point of entry to other countries in the grouping.
At the same time, the FICCI study said, there were a number of products where India and the new member nations were competitors due to the low cost advantage offered by both.
The new members compete in 33 of the top Indian 100 exports to EU, the lobby group's study said.
India has been exporting goods worth 
13.7 million ($304,000) annually to the 10 new members of the EU, while imports stand at 6.9 billion ($153,000).
The bilateral trade thus may not be significant, but the Delegation of the European Commission in India sees ample scope for expansion.
The main items of exports from India to these countries include gems and jewellery, pharmaceuticals, leather products, tea, coffee, sesame seeds, tobacco, textiles, plastics, machinery, chemicals and electronics goods.
The major items imported by India include leather, readymade garments, pharmaceutical products, fertilizer, electronic goods, rubber, chemicals, industrial machinery and metal scrap.
The situation in the case of foreign direct investment (FDI) inflows from these countries is similar.
Between 1991 and 2002, total FDI approved by India from these 10 countries was merely $83.17 million. This, too, is seen as improving over the next few years.
G.K. Pillai, additional secretary in the Ministry of Commerce and Industry, said it was imperative for Indian industry to harmonise trade domestically to become more competitive and play an incisive role in the enlarged trade grouping.
He said India should market its strengths in products like diamonds, tobacco, paper, biotechnology, as competition from the new acceding countries will be minimal. He said that the enlarged union presented India with a unique business opportunity way of joint ventures.
The current round has been the biggest enlargement of what started in the 1950s as the European Coal and Steel Community and later the European Economic Community (EEC) with six founding members - Belgium, the Netherlands, Luxembourg, France, Germany, Italy.
It gradually grew to nine members in 1973 with Britain, Ireland, and Denmark joining it, then to 10 in 1981 with the addition of Greece, and to 12 in 1986 with the accession of Spain and Portugal. In 1995 Austria, Finland and Sweden joined the EU to make it a 15-member bloc.
Source: IANS
13.7 million ($304,000) annually to the 10 new members of the EU, while imports stand at 6.9 billion ($153,000).
The bilateral trade thus may not be significant, but the Delegation of the European Commission in India sees ample scope for expansion.
The main items of exports from India to these countries include gems and jewellery, pharmaceuticals, leather products, tea, coffee, sesame seeds, tobacco, textiles, plastics, machinery, chemicals and electronics goods.
The major items imported by India include leather, readymade garments, pharmaceutical products, fertilizer, electronic goods, rubber, chemicals, industrial machinery and metal scrap.
The situation in the case of foreign direct investment (FDI) inflows from these countries is similar.
Between 1991 and 2002, total FDI approved by India from these 10 countries was merely $83.17 million. This, too, is seen as improving over the next few years.
G.K. Pillai, additional secretary in the Ministry of Commerce and Industry, said it was imperative for Indian industry to harmonise trade domestically to become more competitive and play an incisive role in the enlarged trade grouping.
He said India should market its strengths in products like diamonds, tobacco, paper, biotechnology, as competition from the new acceding countries will be minimal. He said that the enlarged union presented India with a unique business opportunity way of joint ventures.
The current round has been the biggest enlargement of what started in the 1950s as the European Coal and Steel Community and later the European Economic Community (EEC) with six founding members - Belgium, the Netherlands, Luxembourg, France, Germany, Italy.
It gradually grew to nine members in 1973 with Britain, Ireland, and Denmark joining it, then to 10 in 1981 with the addition of Greece, and to 12 in 1986 with the accession of Spain and Portugal. In 1995 Austria, Finland and Sweden joined the EU to make it a 15-member bloc.
Source: IANS