Lower EU tariffs may help India

The enlargement of the European Union would lead to lowering of tariff rates in new member countries, which would benefit countries like India.

But at the same time there is likely to be some trade diversion in sectors like pharmaceuticals and textiles where India exports could be replaced with local EU products, a senior government said today.

"Poland and Czech Republic are our principal competitors in a number of our top exports to the EU. With accession, products from these countries would become more competitive. To some extent, India's garments to EU (after the MFN phase out) could be replaced by similar exports from accession countries," S N Menon, Special Secretary in the Ministry of Commerce and Industry said.

Addressing a seminar on the implications of an enlarged EU, Menon said that pharmaceuticals was another sector where India's exports to the new member countries could be replaced by exports from EU countries.

Menon said that in order to further expand into the EU market the domestic industry should concentrate more on exports of value added products and on diversification of the trade basket.

The enlargement of the EU would also impinge on trade policy areas like bound tariffs, quota obligation, quantitative restrictions and the tariff rate quota regime, he said.

Similarly, the anti-dumping and the anti-subsidy measures currently being applied by the European union would be applied to the new members as well, he said adding that Outward and inward foreign direct investment would undergo general impact to the extent that the former east and central European countries are in competition with India looking for inward FDI.

Menon pointed out that market access for Indian goods and services in EU was increasingly becoming difficult on account of numerous and varying sanitary and phyto sanitary, packaging and labelling requirements.

He said that the Indian government and the European union have entered into a partnership for implementation of a trade and investment development programme to address the issue of upgradation of testing and inspection regime in India and upgradation of testing and inspection facilities.

Speaking on the occassion, Stefano Gatto, Counselor and head trade and economic affairs with the European Commission delegation in India said that services particularly information technology and pharmaceuticals were strong areas of growth for Indian exports to the EU.

Gatto said that Indian firms would also benefit on account of the simplification and unification of customs procedures.