evaluation of the ec market access partnership - case ...in india draft client: european commission,...

Evaluation of the EC Market Access

Partnership

In-depth assessment of the functioning of the

Market Access Partnership in India

Client: European Commission, Directorate General for Trade

New Delhi, 8 June 2012

Personal data in this document have been redacted according to the General Data Protection Regulation 2016/679 and the European Commission Internal Data

Protection Regulation 2018/1725

Evaluation of the EC Market

Access Partnership

In-depth assessment of the functioning of the Market Access Partnership in India

Draft

Client: European Commission, Directorate General for Trade

Rohan Krishna

Floor Smakman (ed.)

New Delhi, 8 June 2012

2

AC23760

Table of contents

Evaluation of the EC Market Access Partnership 3

1 Introduction 5

2 Background EU-India Trade and Investment Relations 7

2.1 EU-India trade and investment relations 7

2.2 Trade and investment flows from the EU to India 9

2.3 Key trade and investment barriers in India 12

3 The Market Access Partnership – Set up and Process 15

3.1 Set-up and organisation of the MAP in India 15

3.1.1 Organisation of the European business community in India 16

3.2 Procedures, communication and information exchange 17

3.2.1 Key barriers addressed 17

3.2.2 Communication and information exchange 17

4 The Market Access Partnership – Performance and Results 19

4.1 Involvement of key stakeholders 19

4.2 The MAP and the EU-India FTA negotiations 19

4.3 Key results achieved 20

4.4 Added value of the MAP in India 21

5 Key Findings and Conclusions 23

5.1 Key findings on functioning of the MAP in India 23

5.1.1 Procedures and communication 23

5.1.2 Performance and results 25

5.2 Key factors behind success or lack thereof 25

Annex I Audit Trail Error! Bookmark not defined.

5

Evaluation of the EC Market Access Partnership

1 Introduction

The Market Access Partnership and local Market Access Teams

The Market Access Strategy was originally launched in 1996 and aimed at enforcing multilateral

and bilateral trade deals and at opening third country markets to EU exports. The strategy has two

pillars: 1) providing EU businesses with information on market access conditions and 2) creating a

framework within which the barriers to trade in goods, services, intellectual property and investment

are tackled.

The strategy and particularly the second pillar of the strategy was given a further impetus in 2007

with the launch of the Market Access Partnership (MAP), which brings together the European

Commission (EC), national governments and businesses with the ultimate aim of removing barriers

for EU exporters and investors on markets outside the EU. The MAP is built up of three mains

platforms of coordination for all key stakeholders:

(1) The Market Access Advisory Committee (MAAC) and (2) Market Access Working Groups

(MAWGs) on the EU side and (3) the local Market Access Teams (MAT) in third countries,

established as diplomatic trade tools in third countries.

The local Market Access Teams (MAT),bring together the MAP partners based in the third country

concerned. While the concept of a MAT is a flexible one, MATs can functionally being seen as

mirroring the MAAC-structure in Brussels: from providing a general platform for coordination among

the Commission and MS, involving business where needed, to creating specific thematic Working

Groups when necessary. The format of a MAT does therefore range from regular trade counsellor’s

coordination meetings on market access issues (between Commission DEL and MS and involving

business when appropriate) to very specific, working group-type meetings that focus on a special

barrier or sector. While in some countries, this sort of coordination on trade barriers has already

been well established (and served as best practice for new MATs), for other countries the launching

of the Market Access Partnership has given a new impetus.1

In-depth review of MAT in India

As part of the overall evaluation of the MAP (including its main platforms), five countries were

selected for a more in-depth review of the functioning of the MAT locally and within the context of

the MAP. India was one of the countries selected.

This review focused on the functioning of the MAT in India. The methodology adopted for this

review included desk-based research of existing documentation followed by in-depth interviews with

a selected number of stakeholders in India viz. the EU Delegation in India (EUD), Embassies of

Member States (MS) and the European business community in India.

Field work for this review took place in May and June 2012.

The Ecorys team would like to thank all interviewees for their time and contributions.

1 http://trade.ec.europa.eu/doclib/docs/2010/june/tradoc_146233.pdf

7


2 Background EU-India Trade and Investment Relations

2.1 EU-India trade and investment relations

Formal diplomatic relations between the European Union (then the European Economic Community

(EEC)) and India were established in the early 1960s. The extent of trade and economic relations

between the EU and India has grown over the years with various joint initiatives, economic

agreements, and a series of annual EU-India summits.

In 1994, the EU and India signed an agreement aimed at extending relations well beyond trade and

economic cooperation. The year 2000 brought about the first EU-India summit, held in Lisbon.

Since then trade acts as the pillar of India’s relationship with the EU. In 2004 at the 5th

EU-India

Summit in The Hague the EU-India partnership was classified as a ‘strategic partnership’ for both

countries. With the strength of EU-India relations growing over time, the levels of EU-India trade

and investment have also been growing. The latest trade and investment data shows a continuing

positive trend. In 2011 trade in goods between the two countries experienced its highest annual

growth, reaching EUR 80 billion, while trade in services was over EUR 20 billion, making the total

annual trade between the EU and India exceed EUR 100 billion. Despite the absolute increase in

two way trade between EU and India there has been a downward trend in the share of EU’s trade in

India (See Figure 2.1 and Figure 2.2).

Figure 2.1 EU imports from India

Source: Source: Export Import Data Bank, Ministry of Commerce and Industry, India and

http://eeas.europa.eu/delegations/india/documents/eu_india/trade_investment_2011_2.pdf

17

18

19

20

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2007 2008 2009 2010 2011

EU im

po

rts

in b

illio

n e

uro

s

year

EU's Import from India inbillion Euro

EU share in India's exports

8 Evaluation of the EC Market Access Partnership

Figure 2.2 EU exports to India

Source: Source: Export Import Data Bank, Ministry of Commerce and Industry, India and

http://eeas.europa.eu/delegations/india/documents/eu_india/trade_investment_2011_2.pdf

The EU and India are among the founding members of the WTO, and are major trading partners in

the global trading system. The two countries adopted a Joint Action Plan in 2005 (revised in 2008)

facilitating the strengthening of consultation mechanisms, increasing bilateral trade, removal of

trade barriers, improvement of political cooperation, enhancement of economic policy formulation

and cooperation (in the fields Aviation, Education, Multilingualism, etc.) and development of trade

and investment.

At the EU-India summit in 2006, the High Level Trade Group - established in 2005 with the purpose

of intensifying trade relations - recommended that an expanded trade partnership should be

developed through the negotiation of a broad-based Bilateral Trade and Investment Agreement

(BTIA). Negotiations for this BTIA or the EU-India Free Trade Agreement (FTA) were launched in

Brussels in 2007. The proposed FTA is supposed to be WTO compatible and ambitious (i.e. going

beyond WTO commitments) covering not only trade in goods and services, but also investments,

concentrating on non-tariff barriers, rules and regulations such as Intellectual Property Rights

(IPRs), competition policy, and government procurement. The year 2008 marked the signing of a

number of new agreements such as the Horizontal Civil Aviation Agreement, Joint Declaration in

field of Education and Joint Work Programme on Energy, Clean Development and Climate Change.

The 11th

EU- India Summit, held in Brussels in 2010, reviewed EU-India relations: stressed on a

balanced conclusion of the FTA of 2011, encouraged the increasing cooperation in the field of

security and defence, and issued a Joint Declaration on International Terrorism.

Eleven rounds of negotiations on the FTA have been held up to February 2012.2 Negotiations so

far have discussed trade in goods and services, SPS Measures, technical barriers to trade,

investment, non-tariff barriers such as IPRs, accountancy, insurance, banking and retail,

competition policy, customs and trade facilitation, trade defence, etc.3

The expected impacts of the FTA are substantial. A Federation of Indian Chambers of Commerce

and Industry (FICCI) report recently indicated that trade is likely to more than double and exceed

2 “Overview of FTA and other trade negotiations, updated” 26 June 2012.

http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf 3 Ministry Of External Affairs, India

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2007 2008 2009 2010 2011

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xpo

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in b

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EU exports to India inbillion euro

EU share in India's Import( in percentage)

http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf

9


USD 207 billion by 2015, if the trade pact is formalised.4 A recent (2009) Ecorys study on the

potential impact of an ambitious EU-India FTA estimated among other things that an ambitious FTA

could increase Indian GDP by up to 1.6 percent in the long run and could increase total EU export

(to India and the rest of the world, by up to 0.4 percent (which seems low, but in absolute terms is

quite substantial)5

2.2 Trade and investment flows from the EU to India

The EU is by far India’s largest trade and investment partner representing about 12% of India's

goods imports and 19% of its exports in 20106. Since the first EU-India summit held in Lisbon in

2000, trade has acted as the backbone of India’s relationship with the EU. Europe has always been

one of the most important destination for India’s exports and source of its imports. Trade between

the two regions has grown from EUR 31.5 billion in 2001 to EUR 95.9 billion in 2011.

Trade in goods and services

Figure 2.3 below depicts the trade in goods between EU and India. The trade flow has been

gradually increasing since 2001. 2009 recorded a dip due to the debt crisis in Europe (connected to

global financial turmoil of 2008-2009) also having an adverse impact on the credibility of EU.

Exports of goods from EU to India fell from almost EUR 29.5 billion in 2008 to around EUR 27.4

billion in 2009. Imports of goods decreased from EUR 29.5 billion in 2008 to EUR 25.4 billion in

2009 as well. It is also evident from the below graph that there has been an increase in trade once

again in 2011. According to a recent Carnegie Paper7 by Bernd von Muenchow-Pohl this

improvement during 2011 has been termed as a ‘positive surprise’ which is unlikely to continue till

2012. The author calls for a timely conclusion of the FTA negotiations for it to “provide the

momentum needed for a quantum leap in the EU-India economic relationship”.

Figure 2.3 Trade in goods

Source: Eurostat

4 “Minister-level meeting next month on India-EU free trade agreement”, The Economic Times, May 20, 2012. Downloadable

from http://articles.economictimes.indiatimes.com/2012-05-20/news/31788362_1_india-eu-summit-hurdles-like-visa-

problems-karel-de-gucht 5 ECORYS (2009) Trade Sustainability Impact Assessment for the FTA between the Eu and the Republic of India. Stduy

commissioned by the EC, DG Trade (TRADE07/C1/C01).

http://trade.ec.europa.eu/doclib/docs/2009/june/tradoc_143372.pdf 6 Ministry of Commerce and Industry, India: Export Import Data Bank

7 von Muenchow-Pohl, B. (2012),”Indian and Europe in a multipolar world”. The Carnegie Papers, South Asia, May 2012.

0

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20012002200320042005200620072008200920102011

Trad

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UR

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)

IMPORTS

EXPORTS

http://articles.economictimes.indiatimes.com/2012-05-20/news/31788362_1_india-eu-summit-hurdles-like-visa-problems-karel-de-gucht

http://articles.economictimes.indiatimes.com/2012-05-20/news/31788362_1_india-eu-summit-hurdles-like-visa-problems-karel-de-gucht


Figure 2.4 presents a similar overview for trade in services between EU and India. The general

trend shows an increase since 2001 with a few fluctuations in the period 2009-2011. Several factors

may be attributed to this positive trend including, among others, the initiation of strategic

partnership between EU and India in 2004 and the establishment of EU-India joint action plan in

2005.

Figure 2.4 Trade in services

Source: Eurostat

Sectoral composition of trade flows between EU and India

The performance of some leading sectors in the trade in goods flows between EU and India is

illustrated in the following figures.

Figure 2.5 Sectoral contribution of EU exports to and imports from India - goods (2011)

Source: Eurostat

The sectoral composition of trade in goods between the EU and India suggests a certain degree of

complementarity between these two economies, with the EU specialising in higher value added

intermediate capital goods and India specialising in primary products and finished consumer goods.

0

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tr

ade

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(EU

R m

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n)

exports

imports

0 5 10 15 20 25

Food and beverages

Industrial supplies N.E.S

Fuels and lubricants

Capital goods (except transport)

Transport equipments

Consumer goods N.E.S

Contribution to trade (EUR billlion)

imports

exports

11


For the year 2011, Industrial supplies, capital goods and transport equipments made up the bulk of

EU export in goods to India with a share of 51%, 34% and 10% respectively. For India’s, the

industrial supply (34%), consumer goods (27%) and fuel and lubricants (12%) sectors were the

main contributors to the country’s exports to the EU.

Figure 2.6 Sectoral contribution to EU exports and imports in services to India (2011)

Source: Eurostat

Foreign Direct Investment

Europe is India's largest source of Foreign Direct Investment (FDI) with a stock of EUR 34.4 billion

and India's investments in Europe is approximately EUR 7 billion (see Figure 2.7). Latest data on

EU-India trade for 2011 shows a two and a half times increase of FDI from the EU into India

reaching EUR 12 billion. Indian companies invested EUR 1.9 billion in the EU in 2011.8

Figure 2.7 EU FDI with India (flows and stocks in EUR billions)

Source: EC, DG Trade, “India: Main Economic Indicators”.

8 New Data on EU-India Trade (07/06/2012). Accessible from

http://eeas.europa.eu/delegations/india/press_corner/all_news/news/2012/20120607_en.htm

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

Transport

Travel

Communication services

Construction

Insurance

Finance

Computer and IT

Royalties and License fees

Other business services

Governmental services and others

Contribution to trade (EUR billion)

import

export

0

5

10

15

20

25

30

35

40

Inflows Outflows Inward stocks Outward stocks

EU27 FDI with India EU27 stocks of FDI with India

2008

2009

2010

http://eeas.europa.eu/delegations/india/press_corner/all_news/news/2012/20120607_en.htm


The EU remains by far the largest investor in India, with approximately 17% of total investments in

2009 (see Table 2.1). However, the EU share has declined recently, from 26.3% of total FDI in

2006 to 16.9% in 2009.

Table 2.1 EU FDI share in India

Year EU FDI to India

(USD m)

Total FDI inflow into India

(USD m)

EU share in FDI inflows

into India (%)

2000 574 2,872 20.0

2001 1,005 3,728 27.0

2002 823 3,773 21.8

2003 657 2,487 26.4

2004 1,056 3,753 28.1

2005 664 4,355 15.3

2006 2,927 11,119 26.3

2007 2,444 15,921 15.3

2008 6,258 33,029 18.9

2009 4,562 27,044 16.9

Source: “FDI synopsis on country EU countries (as on 31.12.2009)” Department for Industrial Policy and Promotion (DIPP)

EU has a leading share of FDI inflow in India, accounting for a quarter of total investments. Many

European companies like Nokia, Phillips, Novartis, Standard charter, HSBC, Aviva etc. invest in

diverse economic sectors of India like, financial, energy, civil aviation, pharmaceuticals etc. EU is

also becoming the main destination of India’s outward FDI flow extending to sectors like steel,

automobile, pharmaceuticals and energy.

2.3 Key trade and investment barriers in India

Despite India’s remarkable growth story and increasing trade and investment flows in the recent

past, it still imposes many tariff and non-tariff barriers that restrict trade and investment from the

EU, implying there is still a great deal of untapped potential in terms of market access to India for

EU businesses. In terms of the 'ease of doing business' in India, the World Bank downgraded

India’s rank from 120 in 2008 to 132 in 2012 (out of 183 economies)9. The Trade and Investment

barriers Report 201210

presents an overview of the barriers that were overcome, barriers that have

been partly addressed and newly identified barriers to trade and investment in India. Barriers where

success or substantial progress has been achieved are presented below.

Table 2.2 Trade barriers overcome or partly overcome in India

Year barrier

was overcome

Sector Description of barrier Key factors in overcoming

the barrier

April 1, 2011 Cotton Restriction on export of cotton yarn

and raw cotton. Export restrictions on

cotton and cotton products put an

upward pressure on world prices and

cause distortions to security supply.

India is one of the main EU

sources of cotton and EU

concerns were raised with the

Indian authority including by

DG Trade.

9 World Bank (2012), “Doing Business”.

10 European Commission (2012), “report from the Commission to the European Council: Trade and Investment barriers

Report 2012”, COM(2012) 70 final

13


Year barrier

was overcome

Sector Description of barrier Key factors in overcoming

the barrier

2011 Tele-

communication

services

Security and licensing requirements

for telecommunication network-

Requirements:

Transfer of technology within 3

years of contract

Replace native engineers with

Indian counterparts

Disclosure of information for

security purposes

The initial requirements

departed considerably from

consolidated international

practices. Hence concerns

were raised by many countries

including EU, and India finally

discontinued the initially

imposed strict security rules.

October 12,

2011

Food Sector The restrictions came in the form of

Mandatory need for laboratory

testing and review test results to

certify compliance with relevant

Indian food import regulation.

Large size of samples Tested,

increasing sampling cost.

Mandatory labelling requirements.

Extensive engagement of staff

time from the EUD, key MS

and key PS players.

Internal capacity of MS was

considered crucial in this case.

The practical considerations of

these requirements were

probably too burdensome for

even the GoI to carry out

possible pressure on the GoI

by the EU stakeholders

July 16, 2007 Alcohol Heavy discriminatory taxation

measures, procedures and

requirements were imposed,

hampering the internal distribution and

sale.

Talking to the FSSAI on the

food issues was the primary

reason for the recent success

in this sector, in the form of

suspension.

2011 SPS (Bovine

semen)

India’s SPS import requirements were

ad hoc and beyond international

standards and were without scientific

justification.

The EC along with EUD kept

on pushing on these barriers

with India.

Issues were raised at the

bilateral level.

Barriers were flagged in the

WTO SPS committee.

Source: Trade and Investment Barriers Report 2012

As a consequence of the on-going negotiations on the EU-India FTA, India has opened up to an

extent. However, continued effort is required to overcome some of the key trade and investment

barriers for a better and more efficient trading system. Certain barriers still exist and are being deal

with by the stakeholders in India. The key barriers affecting EU-India trade are presented in Table

2.3 below.

Table 2.3 Key trade barriers in India

Sector Description Mentioned

in MADB?

Alcoholic Beverages Despite some earlier improvements in certain Indian states, imported

wines, spirits still appear to remain affected by either discriminatory

taxation measures or by procedures/requirements, hampering the

internal distribution and sale.

YES

Packaged products All packaged products which are subject to the provisions of the YES


Sector Description Mentioned

in MADB?

Standards and Measures Rules (1977), must be labelled with the

MRP, already before they are imported to India.

Animal Health Import and sanitary requirements are beyond international

standards for

Bovine semen / embryos

Poultry and poultry products.

Pig meat, pig meat products and derivatives.

YES

Railway and Energy Electronic Safety systems for railways imposes manufacturing and

testing restrictions on the suppliers of software embedded electronic

systems.

Renewable energy - solar power plants and wind turbines. India lays

down local content requirements on these sectors. For instance, if

any wind turbine generator of capacity in excess of 15 MW is set up

without “adequate manufacturing facility”, it will be uprooted at

owners cost and heavy penalties and guidelines would be imposed.

NO

Medical services India has unclear legal framework for medical services. Also, the

process of issuing import licenses is not well coordinated with device

registrations, leading to significant delays at import.

YES

Postal and Courier

services

Weight restriction to 150gms for letters and

50gms for express delivery articles.

Registered private express operators would only be allowed to

operate in the reserved area as long as they charge no less than the

postal tariffs for letters and express delivery articles.

Private operators who wish to operate in the reserved area would

have to register and then obtain a license too.

YES

Radial tyres and steel

products

New standards for radial tyres- India has developed domestic tyre

standards and own compulsory conformity certification system which

deviates from internationally recognized technical requirements.

Steel products - Through a customs notification of 1st march, 2011,

the Indian government has increased the rate of export duty for all

types of iron ore at an unified level of 20% ad-valorem.

YES

Raw materials On Iron ore concentrates and iron ore fines, export duty was raised

to 20% from March 2011.

On raw hides and skins and certain semi-finished leather – an export

duty is applied from 25% to 60 %.

YES

Telecommunication

services

Security and licensing requirements for telecommunication network-

Requirements:

Transfer of technology within 3 years of contract

Replace native engineers with Indian counterparts

Disclosure of information for security purposes

YES

Vegetables, pulses,

fruits, flower bulbs,

timber and speciality

wood.

India imposes burdensome requirements on the import of these

products. The Plant Quarantine Order 2003 lists a number of fruits

and vegetables that have to undergo Pest Risk analysis, which is

unclear, lengthy and bureaucratic. Also, imposes requirement for

fumigation treatment for import of plant products based on

substances banned by the Montreal Treaty.

YES

Source: “Priority barriers to trade with India”, EUD India document

15


3 The Market Access Partnership – Set up and Process

3.1 Set-up and organisation of the MAP in India

The India country study within the overall evaluation of the MAP focused on the functioning and

performance of the so-called Market Access Teams (MAT) in India. In principle, the MATs function

by providing a general platform for coordination among the EC, Member States (MS) and the

business community (or private sector), on the identification, analysis and addressing of market

access issues in the host country. The format of a MAT may differ per specific host country.

At the outset of the evaluation in India it became clear that there is no formal, trilateral MAT in India

which would meet at regular intervals or in accordance with a pre-defined planning and which

includes all three key stakeholder groups. When the Market Access Partnership was introduced, a

more flexible approach for its implementation in India was considered to be appropriate. This

approach was taken in agreement with the EC (DG Trade) and in view of the particular conditions

prevailing in India.

Reasons for not having a formal MAT in India include:

Often issues discussed and debated are of national (MS) interest and not EU-wide; therefore

including all MS and industry representatives may not lead to an efficient outcome. The EUD

already faces challenges in terms of prioritising the various barriers to European trade.

Given the large number of stakeholders in a country the size of India, a formal MAT with

structural involvement of all these stakeholders does not seem feasible.

The geography of the country makes it impractical to involve all relevant stakeholders physically

in one location at regular time intervals.

Therefore, as mentioned a more flexible, needs based approach to the MAP has been adopted. For

instance, in the case of tyres, there are only three European companies and three MS interested in

discussing the related barriers in India and therefore the EUD decided to interact with the

concerned MS and companies and not to involve all the remaining 24 MS. This enables a more

efficient and focussed discussion on the subject.

Generally speaking, MA issues are discussed with the commercial counsellors from EU MS on a

monthly basis, and the "Priority barriers to trade with India" list is re-negotiated and updated on an

annual basis. This list comprises a "top ten" listing and serves as a useful tool for an informal EU

prioritisation and common narrative as concerns the barriers which are described therein. In

addition, the EUD also prepares, in close consultation with the EU MS, demarches on certain MA

barriers. Such demarches include views of the EU MS on these barriers and information obtained

from their bilateral exchanges with Indian stakeholders.

As regards MS involvement it should be noted that the bigger MS often possess a strong and

coordinated internal structure with efficient internal teams and sector specific specialists. Hence

they are in position to support themselves sufficiently and depend less on the EUD. However the

smaller MS are less likely to have the requisite expertise and hence an efficient working and

support of the EUD may be necessary for them to deal with trade barriers and other market access

issues.


The private sector or industry representatives are occasionally invited to the monthly Commercial

Counsellors meetings. However discussions also take place between the different stakeholders on

an issue driven basis, whether concerning an existing or a newly emerging MA barrier. As required

and appropriate, the EU commercial counsellors attend meetings organised between the EUD and

the industry, or, alternatively, industry representatives are invited to the monthly meetings of EU

commercial counsellors. Also, members of the Trade section of the EUD could be invited to

discussions held between national industry representatives and their respective commercial

diplomats in Delhi. Face to face meetings are supplemented by e-mail communication between the

EUD and industry/MS representatives.

With a view to ensure more structured and regular interactions with European industry

representatives, the Trade Section of the EUD recently set up two additional contact groups with

EU industry representatives (on ICTs and automotives) and a third one on pharmaceuticals is

currently being considered. The membership of these contact groups largely mirrors that in the

corresponding sectoral groups of the European Business Group (EBG), one of the main industry

representative organisations in India (see next section).

Other examples of interactions with industry and MS include the informal group of EU airlines, set

up and coordinated by the EU Delegation. Similarly, in the agriculture/food sector (where a large

number of market access issues relating to sanitary and phytosanitary (SPS) requirements severely

limit the entry of EU food products to India), the EUD works with MS counsellors and – if interests

match – also with other third country agricultural counsellors, interacting with the concerned

ministries and with para-governmental associations/universities, as appropriate.

3.1.1 Organisation of the European business community in India

The European business community in India is organised through three main different structures: the

European Business Group (EBG), the European Business and Technology Centre (EBTC) and the

EU-India Chamber of Commerce.

The European Business Group, established in 1997, was a joint initiative of the EC and the

European business community in India and has been recognised by the Government of India (GoI)

and the EC as the industry lobby representing the interest of European companies in India. The

EBG is supported by the EC and represents the 27 MS of the EU as well as accession countries (in

the process of joining the EU) and its partners in the European Economic Area (EEA).

The main objective of the EBG is to increase European business in India. All information of the

EBG is channelled through the sector specific working committees and is documented in their

annual position paper. EBG uses these position papers to support and help the Government of

India to understand the MA issues. The purpose for having these sectorial committees is to help

companies voice their views based on realities on the ground. EBG plays a vital role in this respect

by providing a forum that the country chambers do not provide.

A second platform in India which is aimed at promoting the trade links between the EU and India is

the European Business and Technology Centre established in 2008-09. The EBTC is funded by the

EU and Euro Chambers to provide advice to companies in the EU that are interested in entering the

Indian market (while the EBG addresses the concerns of the European companies that already

exist in India). India, being one of the largest and fastest growing markets in the world, offers a wide

range of opportunities for European businesses and scientific communities. However, many

companies encounter significant difficulties when trying to enter the market. The EBTC was

established as a point of reference for European companies and researchers wanting to enter the

Indian market, with a focus (non-exclusive) on climate change.

17


The third platform is the Council of EU Chambers of Commerce in India set up in 1992 which

serves as the apex Chamber representing the interests of European Companies and Entities in

India. The Chamber is an important link between EU and Indian businesses. The Council of EU

Chamber of Commerce organises events and business seminars so that businesses from both

regions can interact freely. The Chamber provides a platform for businesses from both the regions

to interact and explore possibilities of exports, imports, joint ventures, technology exchange and

trade dialogue.

3.2 Procedures, communication and information exchange

As discussed above, the EUD and the MS meet at the monthly commercial counsellor’s meetings,

involving industry representatives occasionally to discuss economic prospects (incl. MA issues).

The discussion focuses on trade related aspects, difficulties to move forward in different sectors

and other economic concerns.

3.2.1 Key barriers addressed

According to the EUD an active triangular information flow on MA issues takes place across a wide

range of sectors with key MS and industry representatives. The issues addressed include all areas

covered by the “Top Ten Barriers List” and particularly those sectors most relevant for the EU-India

FTA negotiations and the EUD’s on-going MA activities. The list is seen as a non-exhaustive list

and includes food and drink, agriculture, cars and car parts, telecoms equipment and licensing,

banking and insurance, electronics and healthcare equipment, etc. The “Top Ten Barriers List” is

prepared locally and discussed regularly in the monthly commercial counsellors meeting. Although

the list is more or less in line with the issues listed in the MAP key barriers list for India, the EUD

added that the highest level priority issues related to MA barriers were dealt with in the FTA

negotiations and therefore kept outside the “Top Ten” list. This is most likely a matter of negotiation

tactic, as making your top barriers to address public could be seen as giving away your negotiation

position.

Within the “top ten” list there is always the issue of prioritisation as some MS may find a certain

barrier more pressing than others. Therefore, the EUD tries to prioritise this list regularly on the

basis of the following criteria:

Economic interest and importance of the issues to the EU;

Potential size of the market in India affected by the barrier;

Possibility of the barrier being overcome relatively easily with the GoI.

3.2.2 Communication and information exchange

The MS aim at making information available on its MA issues to the EUD on a case by case basis.

The MS relay this information back to their respective Capitals. The extent of information sharing is

also often based on the benefit (or cost) of involving a competing MS. Moreover the EUD reports to

DG Trade and the MAAC on the market access work it does on a regular basis.

There is no formal early-warning mechanism in place to make stakeholders aware of a new barrier.

It is usually through hear-say that the barriers are communicated to various stakeholders. The EUD

and MS get information regarding existing and potential new MA barriers through the industry as

well as through other channels, such as media, discussions going on in other third countries and

other “like-minded countries” dealing with India on similar trade issues, and from the business circle

or industry representatives.


According to the EUD the MAAC is seen as a “sounding board” which basically confirms the

findings of the EUD and gives its approval to take further action on issues dealing with MA in India.

The MAAC is dealing with EUDs from all over the world and therefore not expected to have an in-

depth understanding of the local MA barriers which is seen as the role of the EUD.

The contribution of the MAWG is more technical in nature than that of the MAAC. Various MAWGs

are organised by DG Trade on different sectors (e.g. Tyres, Healthcare equipment, alcohol, etc.).

When the EUD reports on key MA issues in India, DG Trade would react and trigger the right

MAWG and invite the EUD to participate by telephone/video conference to discuss the issue in

further detail.

The third stakeholder, the EU business community, generally addresses its MA issues through

three channels in India:

Own country chamber of commerce;

Federation of Indian Chamber of Commerce and Industry( FICCI) / Confederation of Indian

Industry (CII);

European Business Group (EBG) and European Business and Technology Centre (EBTC).

There is no formal procedure for involving the private sector in the identification, prioritisation and

addressing of key barriers, but its inputs are obtained on an ad-hoc and needs basis. Despite not

being structured, private sector engagement does seem to take place on an on-going basis, even if

it does not involve all MS or all business representative organisations for each issue. For example

in case of barriers in the telecommunications sector there were only two private players and their

respective MS making it natural and easy for them to join forces in pursuing the matter with the

local authorities. The barriers related to alcohol labelling concerned another area which saw

common interests. The EUD was involved in these processes in a coordinating role.

According to the EUD and the MS interviewed the European business community had not yet

approached them with a request to be more present in the discussions. The industry

representatives interviewed however felt that involving the PS in more formal and regular meetings

may add value as it would allow them to voice their opinion to the EUD and MS on issues that

affect them the most. Also, according to them the business community is the most aware of the MA

barriers on the ground and the challenges they face in dealing with such barriers. It was also felt

that the “combined voice” of all the stakeholders may add pressure on the Indian Government to

reconsider its position on various MA issues.

Communication tools

The EC has a number of communication tools in place such as the Trade and Investment Barriers

report, flash notes, DG Trade website, MA newsletter, minutes of the MAAC/MAWG meetings,

hymn sheets, etc. While the MS receive weekly updates from the EUD on the economic

developments in India, which give an overview of trade policy and related activities in India neither

member states, nor industry representatives interviewed, were aware of many of these formal MAP

communication tools (e.g. MA flash notes or MA newsletter). The MS however added that such

documents may not provide much more help as sufficient information is already available to assist

them in their daily activities. However, the industry representatives interviewed felt that structures

such as the MAAC and MAWG could help them obtain more tangible support.

MS do receive reports from the MAAC and MAWG, which are found to be useful in dealing with MA

issues.

19


4 The Market Access Partnership – Performance and Results

4.1 Involvement of key stakeholders

As discussed earlier, instead of through a formal MAT, MA issues in India are dealt with at the

monthly commercial counsellor’s meetings involving the EUD and the EU MS. The industry

representatives are invited occasionally to these meetings by the EUD.

It was also highlighted that on several occasions, such as at the WTO meetings where the EC

represents the MS, only the governments and the various MS communicate with each other, and

not the industry representatives.

Several interviewees indicated that they felt that the industry representatives were under less

pressure to present a common face with the EU to the GoI. The possible reasons indicated for this

include:

Language and cultural differences;

Companies feel that they are self-sufficient and they can achieve what they want without the

need to discuss and address the issue jointly;

Existence of own sector committees at the EBG in India.

Some of the stakeholders found the European business community to be less active than ideal.

Also, some felt that there was a need for a clear division of labour between the various Chambers

of Commerce and the Government (EUD and MS) in order for them to add value. The industry

representatives moreover felt that a better coordinated and structured functioning of these platforms

may in turn lead to a better organised private sector in India.

The MS interviewed saw the various business groups in India more as lobby groups (a typical role

of the EBG is to invite senior Indian government officials to meet with EUD/MS and PS) than as

forums to discuss MA issues. However, the annual EBG position paper was seen by the

interviewees to represent a tangible and useful view from the European industry on the different

sectors covered.

4.2 The MAP and the EU-India FTA negotiations

The top ten barriers list as compiled and updated by the EUD and the MS in the monthly

Commercial Counsellors meetings, does not, as mentioned, include the highest priority barriers that

are discussed in the EU-India FTA negotiations. This is understandable from a negotiating tactics

perspective.

The consultations prior to the EU-India FTA negotiations were carried out in Brussels through the

Trade Policy Commission. The main reason for this is because the level of expertise in Brussels

(which is focused on trade policy) is different from that of MS in India (which is more concerned with

trade promotion). The PS is represented in these consultations through the industry

representatives/forums in Brussels. Contact is established with their counterparts in India on a

need-basis. The MAWGs are considered useful especially prior to the negotiation rounds.


Upon conclusion of a particular round of EU-India FTA negotiations a detailed de-brief session is

organised in Brussels with all MS. The EUD is not directly involved in the EU-India FTA

negotiations but is kept informed on the basis of the discussions with the chief negotiator. The EUD

then shares information with the MS and the PS in India. The extent of information shared with the

stakeholders varies as the negotiations are carried out in confidentiality and therefore information is

only shared with the different stakeholders insofar possible. While relevant information is shared

with the MS in the monthly Commercial Counsellors meetings, the PS is kept informed on an ad-

hoc basis.

Going forward, once there is an EU-India FTA in place, the MAP is likely to play a pivotal role in

monitoring the implementation of the FTA. One of its expected roles could be to formally check

whether certain new acts/amendments to legislations are being acted upon. Also, as discussed

earlier, the EUD is trying to further formalise the communication mechanism between the different

stakeholders via sector working groups. Discussion are on-going on this aspect between the

different stakeholders.

4.3 Key results achieved

The T&I Barriers Report of 2012 highlights some of the recent successes of the EU in overcoming

selected MA barriers in India. Progress was achieved in areas such as removing restrictions on the

export of cotton, in 2010 and in modifying licensing requirements for telecommunication equipment

introduced in 2010.

Another example of a recent success story which was commercially significant is the derogation

provided by the Food Safety and Standards Authority of India (FSSAI) to remove the requirement

for imported alcohol to meet Indian specific labelling requirements at the port of entry and grant

permission for the necessary modifications in labelling to take place in bonded warehouses.

FSSAI had issued guidelines related to imported food clearance process which were to enter into

force summer 2011. The guidelines would have stopped the possibility of labelling in bonded

warehouses to adapt for the India specific requirements. This guideline would possibly have

stopped all trade in alcohol products for at least six to eight months and trade would have been

resumed only with great operational difficulties for the EU industry as they would have needed to

provide for India specific labelling (that actually goes beyond international standards) in their

production line.

The successes as listed above, were achieved in different ways, with the MAP functioning as one of

the contributing factors, but other factors also clearly playing an important role:

For the food imports issue the main factor which seems to have contributed to removal of this

barrier was having real time information and the necessary details for lobbying efforts, so that

concrete evidence of market obstacles could be given with real life examples. Each of the

stakeholders were well aware of the barrier related to food imports. The EUD involved the

affected MS and industry representatives in assessing the issue and discussing the way

forward. Lobbying efforts by EUD in tandem with the industry, MS commercial counsellors and

at headquarters in Brussels helped delay actual implementation of the guideline mentioned

above. While discussions did take place between the different stakeholders, each of them also

tried to approach the authorities in India at their own levels to further intensify the pressure. For

the alcohol labelling the intensive joint efforts with industry were critical in achieving success.

21


As concerns the modification of the licensing requirements barrier, the parallel and coordinated

involvement of the US and Japan in diplomacy efforts, reflecting the similar interests of their

respective telecom industries played an important role.

Extensive engagement of staff time from the EUD, key MS and key industry representatives

appears to have been of importance.

Internal capacity of MS was also considered crucial. Some of the large MS had technical

experts/agricultural counsellors who were able to better tackle the issue with the local

Government.

However it was also highlighted by some stakeholders that the success in these sectors is relatively

small compared to the issues still affecting European companies. The mentioned success stories

represented “low-hanging fruits” and the more complex and pressing issues in these sectors which

the EU community is finding difficult to tackle with the Indian authorities are yet to be eliminated.

More generally speaking it should be noted that EU trade diplomacy is under some pressure as a

consequence of the economic crisis in the EU. The crisis in Europe has negatively impacted India’s

view of the EU as a potentially lucrative market, in other words, as a trading partner, the EU seems

to have less to offer. At the same time, market access issues in third countries becomes more

important for EU operators, as their domestic markets shrink. There were some suggestions that

MS are also less willing to cooperate with each other in this light, as the interest of national

industries is put first.

4.4 Added value of the MAP in India

The main objective of the MAP is to improve cooperation between the EC, MS and business,

setting priorities on barriers and using market access teams on the ground to identify and tackle

potential trade barriers.

In the case of India we observed that there is indeed cooperation between the various stakeholders

in discussing and dealing with the MA issues. However this cooperation has not been significantly

intensified following the introduction of the MAP. The stakeholders have their own methods (for

example regular contact with the Indian authorities) to take up MA issues. The EUD in this respect

plays an important role in encouraging cooperation when deemed necessary.

Several platforms exist in India to debate and set the priorities on barriers including the monthly

commercial counsellors meetings and EBG working groups. Again, these have been in existence

before the MAP was launched in India in 2007. For instance, the EBG has been producing its

Annual Position Paper since 2001. Nevertheless the MAP provides an opportunity for sharing such

information in a more structured manner with all involved stakeholders. The flexible set-up of the

MAP in India, with involvement of the PS on a needs basis seems to work well and was appreciated

as such by most interviewees.

The value added of the MAP as such lies chiefly in achieving coordination in the message that is

sent out. While the stakeholders still approach the GoI and deal with MA through their own

channels (next to joint initiatives), their message is the same. Speaking with one voice in such a

manner is likely to send a much stronger message to the GoI, although the extent to which this

actually leads to a reduction in barriers is hard to gauge, as the success stories have been mostly

in areas that were considered relatively easy, while other factors (e.g. joint diplomacy with third

countries) also seems to have played a role.

23


5 Key Findings and Conclusions

5.1 Key findings on functioning of the MAP in India

5.1.1 Procedures and communication

Set-up and organisation

While there is no formal trilateral MAT in place in India to deal with market access issues, there is a

more flexible set-up of the MAP in India that engages the three key stakeholder groups on a needs

/ issues basis. In general, MA issues are discussed with the commercial counsellors from EU

Member States on a monthly basis where the so-called "Priority barriers to trade with India" list is

discussed and updated on an annual basis. The private sector or the industry representatives are

occasionally invited to these meetings. Additional channels of communication and engagement of

the PS include e.g. contact groups with EU industry representatives (on ICTs and automotives),

which have recently been set up by the Trade Section of the EUD and a third one on

pharmaceuticals, which is currently being considered. The membership of these contact groups is

quite similar to that of the sectorial groups of the EBG.

Often “sub-groups” are formed by the EUD when a MS and an industry representative are

interested in a common MA barrier to discuss whether there is need for the EUD/MS to take up the

matter further with the GoI.

This approach is considered by most of the interviewees to be more flexible and appropriate in the

context of India than a formal MAT. They indicated that there is no need for a formal MAT structure

involving the EUD, all the MS and the PS at set time intervals. The Private sector represented by

the EBG confirmed the above as they found a very good and cordial relation between EUD and

EBG despite the non-existence of any formal MAT, although some of the PS representatives did

indicate that they would welcome more structured engagement in the MAP processes.

The European business community is organised in India into three main structures, the European

Business Group (EBG), the European Business and Technology Centre (EBTC) and the Council of

EU Chambers of Commerce in India.

Some of the stakeholders interviewed found the relevance of these organisations, initiated to

improve EU-India trade links, limited to acting as lobby groups. These organisations are not

considered channels of information. It was also believed that there were too many such structures

largely overlapping each other thereby adding limited value. The industry representatives too felt

that a better coordinated and structured functioning of these platforms may lead to a better

organised private sector in India. Also, while bodies like EBTC and EBG may be less useful to the

big MS as they have their own teams, they may be more important for the smaller MS.

Role of the Brussels based MAP structures

The MAAC is seen as a “sounding board”, which mainly confirms the findings of the EUD. As the

MAAC is dealing with EUDs from all over the world it is not expected to have an in-depth

understanding of the local trade barriers which is, in fact, the role of the EUD. The EUD also

interacted with the MAWGs on a needs basis. The discussions with MAWGs were considered to be

more technical in nature than with the MAAC. While the MS were aware of the existence of


supporting groups like MAAC and MAWG they found limited use of their services in dealing with MA

issues. The industry representatives were largely unaware of these supporting groups.

Key barriers addressed

The EUD together with the MS prepare the “Top Ten Barriers List” by prioritising the most relevant

and important trade barriers to the EU. This list more or less coincides with the key barriers list for

India as included in the MADB. However, it appears to be a non-exhaustive list, as the high profile

trade barriers/issues are being discussed under the FTA negotiations together with the interested

MS and as such are not made public.

The EUD together with the MS prepare the top ten list of trade barriers. They revise and update it

during the monthly counsellor’s meetings. Prioritisation of the key barriers is done on the basis of

the following criteria:

Economic interest and importance of the issues to the EU.

Potential size of the market in India affected by the barrier.

Possibility of the barrier being overcome relatively easily with the GoI.

The European business community generally address its market access issues by sharing and

discussing with the member states directly and mainly through three channels in India:

Own country chamber of commerce;

Federation of Indian Chamber of Commerce and Industry( FICCI) / Confederation of Indian

Industry (CII);

EBG and EBTC.

There is no formal mechanism in place to identify and prioritise key barriers for a truly combined

(EUD, MS, PS) list. Rather identification and prioritisation is done mostly on a needs basis and in

the most efficient manner considered by the affected party. A more coordinated approach may

benefit the affected parties combining voices and having a greater influence on the authorities

concerned.

For instance, bigger MS possess a strong and coordinated internal structure with efficient internal

teams and sector specific specialists. Hence they are in position to support themselves sufficiently

and depend less on the EUD. However the smaller MS are less likely to have the requisite

expertise and hence an efficient working and support of the EUD may be necessary for them to

deal with trade barriers and other MA issues.

Communication and information exchanged

The primary sources for receiving information on the MA developments include the media,

discussions going on in other third countries and other “like-minded countries” dealing with India on

similar trade issues, and from the business circle. These were considered to be the most common

and used sources. There is no formal early warning mechanism in place to make stakeholders

aware of a new barrier. It is usually through hear-say that the barriers are communicated to various

parties. In addition, information regarding existing and new trade barriers is produced in various

newsletters. These includes the Trade and Investment Barriers report, flash notes, DG Trade

website, MA newsletter, minutes of the MAAC/MAWG meetings, etc. However not all stakeholders

interviewed were aware of all of these communication tools. The MS received such information

directly through the EUD but also through website, flash notes, weekly trade and economic update

from EUD and GoI Ministry home pages. The MS interviewed felt that they already had plenty of

information available on the MA issues they were dealing with. However, the weekly trade and

economic update from EUD was seen by the MS as a useful document to keep themselves abreast

on economic issues in the country.

25


5.1.2 Performance and results

Considerable success has been achieved in overcoming MA barriers in India including reducing

restrictions in certain sectors in India like Food, Telecommunication , Cotton, Alcohol and SPS

(Bovine Semen).

Several factors contributed to towards these achievements, including availability and sharing of real

time information between the various stakeholders, coordinated lobbying efforts, presenting

concrete evidence of market obstacles with real life examples and so on.

Extensive engagement of staff time from the EUD, key MS and key industry representatives

appears to have been crucial. The involvement of the different stakeholders in assessing the issues

and discussing the ways to deal with it was seen as useful. In other words, the approach of the

MAP in involving the important stakeholders in the process was seen to be relevant to the success

of addressing MA barriers. At the same time, it must be noted the successes in some of the sectors

were relatively small compared to the issues still affecting European companies in India.

The main value added of the MAP seems to lie in achieving coordination in the message that is

sent out. While the stakeholders still approach the GoI and deal with MA through their own

channels (next to joint initiatives), their message is the same. Speaking with one voice in such a

manner is likely to send a much stronger message to the GoI, although the extent to which this

actually leads to a reduction in barriers is hard to gauge, as the success stories have been mostly

in areas that were considered relatively easy, while other factors (e.g. joint diplomacy with third

countries) also seems to have played a role.

5.2 Key factors behind success or lack thereof

Key factors behind the relative success of the MAP so-far can be summarised as follows:

Strong internal capacity of some of the MS which have technical experts/agricultural counsellors

who are able to tackle the issue in the more efficient way with the local Government. When this

capacity is effectively made available to the EUD, it can help inform a strong case with the GoI

at high level.

Information from the private sector regarding issues on the ground (e.g. customs clearance)

made available to the EUD / MAP through the MS; this information helps policy makers identify

key barriers and understand their nature, allowing for effective negotiations with the GoI.

The issues addressed mostly concerned “low hanging fruits”, which were clearly not of the

highest strategic importance to India and/or never established with the purpose of acting as a

barrier in the first place.

Coordinating with like minded third countries when addressing specific barriers.

It should be noted that EU trade diplomacy is generally speaking under some pressure as a

consequence of the economic crisis in the EU, which has negatively impacted India’s view of the

EU as a potentially lucrative market. In other words, as a trading partner, the EU seems to have

less to offer.

While the flexible set-up of the MAP in India was generally appreciated and considered appropriate

by the interviewees, several felt that some improvements in coordination and communication could

still be made to improve the efficiency and effectiveness of the partnership. Some suggestions

made by the stakeholders to overcome present problems included:


Rationalising of the various business groups viz. EBG, EBTC and EU-India Chamber of

Commerce; making their roles and division of tasks clearer;

Further improving the EUD coordinating role and acting as “expertise tanks”, providing

necessary expertise in specialised areas.

Moreover it was felt that it is important to provide the EUD with adequate resources to continue

supporting the stakeholders in the country and not burdening them with logistical issues (time spent

on preparing for large delegations visiting India).

BELGIUM – BULGARIA – HUNGARY – INDIA – THE NETHERLANDS – POLAND – RUSSIAN FEDERATION – SOUTH AFRICA – SPAIN – TURKEY – UNITED KINGDOM

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