July 2022 / India

July 29 2022

First Round of Negotiations On a Free Trade Agreement between the European Union and India

The first round of EU-India FTA negotiations took place in New Delhi between 27 June and 1 July 2022, with parallel negotiations taking place on investment protection and geographical indications (GIs). The round took place in hybrid mode, with some sessions held entirely by videoconference, and all in-person sessions having additional colleagues joining by videoconference. During the round, the two sides discussed all the chapters to be included in the future FTA except for Trade and Sustainable Development, Institutional Provisions, Exceptions and Final Provisions. The negotiations were based on the 18 textual proposals submitted by the EU side. However, in the case of Trade Remedies, the Indian side had also tabled its own textual proposal. Additionally, the Indian side announced that it would table textual proposals across EU proposed chapters in advance of the next round, possibly including full alternative chapters. The second round of EU-India FTA negotiations will be held in Brussels from 3 to 7 October 2022.

Details per negotiating area:

Trade in Goods: The discussions covered all the articles of the EU-proposed text on Trade in Goods. The atmosphere was cordial and touched upon all sensitive topics of both sides. The discussions pointed at areas where a better understanding of each other’s policies and sensitivities is needed. Rules of Origin: The talks covered all the articles of the EU text proposal for Rules of Origin. Constructive discussions took place between the two sides with a view to identifying areas of convergence and of divergence. Customs and Trade Facilitation: The first round allowed the two sides to go through the whole EU text proposal for Customs and Trade Facilitation. The talks took place in a very good atmosphere. India indicated for each provision where there was common ground and where there would be a need for further deliberations. Sanitary and Phytosanitary Measures (SPS): The two sides worked on the basis of the EU proposed text for SPS. The session was devoted to explaining and clarifying the EU proposal. The Indian negotiator requested detailed clarification about the trade facilitation measures proposed in the chapter. Technical Barriers to Trade (TBT): The negotiations were conducted in a positive and constructive atmosphere. The EU negotiator presented the EU’s proposal for TBT and the two sides discussed all the article and annexes. Trade Remedies: The EU and Indian negotiators had a constructive discussion on the textual proposals on Trade Remedies submitted by the two sides and raised their initial concerns. Services and Investment: The EU negotiators explained in detail the full EU proposal on Services and Investment. India sought clarifications on many aspects of the EU approach and questioned some important elements thereof. Digital Trade: The EU negotiator presented in detail the EU’s proposal for Digital Trade and explained the rationale for each provision. The Indian side welcomed the overall EU text and commented on each provision. Government Procurement: Government procurement was discussed based on the EU draft text. The two sides covered more than half of the text and most of it was agreed, though important elements of the text remained bracketed. Intellectual Property (IPR): The EU and Indian negotiators started the discussions on IPR based on the EU text proposal. They had a first exchange to identify main areas of convergence and divergence. The detailed discussion of the provisions proposed by the EU covered the Sub-sections on copyright, trademarks and designs. Anticompetitive Conduct, Merger Control and Subsidies: The two sides held positive discussions based on the EU’s text proposal. They reached a general understanding of the articles related to anticompetitive conduct and merger control, and identified a few points where further reflection is required. The two sides also held discussions on the articles related to subsidies. State-Owned Enterprises: The two sides held a constructive dialogue on the content of the EU-proposed chapter on State-Owned Enterprises. Small and Medium-Sized Enterprises (SMEs): The EU negotiator gave a presentation of the EU SME policy. The two sides exchanged views on the SME Chapter based on the EU text proposal. Negotiators agreed to give presentations of their existing information-sharing tools and websites during the next round. Energy and Raw Materials: The EU and India negotiators had initial discussions of the EU’s proposed chapter on Energy and Raw Materials. The focus was on clarifying the EU proposal and promoting mutual understanding of each other’s respective priorities and challenges. Transparency: The talks were conducted in a positive atmosphere. The EU and Indian negotiators discussed all provisions of the EU’s proposed chapter on Transparency to gain a better understanding of each other’s sensitivities and concerns. Good Regulatory Practices: The negotiations were conducted in a positive atmosphere. The negotiators discussed all provisions of the EU’s proposed chapter for Good Regulatory Practices. Sustainable Food Systems (SFS): The two sides worked on the basis of the EU proposed text for SFS. The round was devoted to explaining and clarifying the EU proposal. Dispute Settlement: The EU and Indian negotiators had a detailed discussion on the EU's proposed text for Dispute Settlement. The two sides clarified a number of provisions and gained a better understanding of each other’s concerns.

Source: policy.trade.ec.europa.eu

July 21 2022

Exploring Leading Indian States for Investments

Historically, the Indian states (operating as independent kingdoms or semi-autonomous units centuries ago) have been dubbed as the jewels of India's crown, or more aptly, its gilded feathers- allowing it to take flight through their individual thrusts and collective impact. Today, as the country continues to soar economically, its states, each basking in the glory of their own strengths and specialties, have been active participants in India's socio-economic growth.

Perhaps on that account, shortly after foreign investors are keen to invest in the Indian growth story, they are posed with a much-harder question- in a land of opportunities and sectors as far and wide as its population and markets are diverse, what are some of the top states to invest in India?

Albeit investing anyplace in India allows for a host of merits; for example, the states' competitive EODB rankings, investor-friendly policies, and ever-growing market and growth prospects, allow for a healthy competitive spirit among different states to push India's economic stature. However, there are several sector-specific advantages harbored by each individual region. In March this year, the government released data pertaining to FDI equity inflow received by various Indian states. In that order, listed below are some of the top performers as well as the reasons due to which they are popular investment destinations.

Karnataka

During the period from January 2021 to December 2021, this state reported an FDI equity inflow amounting to a whopping $18,554.29 million. The key contributing sectors include:

  • Aerospace and defense
  • Automobile and auto components
  • Agri and food processing
  • Electronic System Design and Manufacturing

In addition, Karnataka has come to be known as the booming hub of research and innovation in Asia. It is a top performer in State Startup Ranking 2021. Some of the major investors involve Cisco, Oracle, Saint-Gobain, etc. The state also contributes to 5.2% of India’s total exports and ranks 3rd in the Export Preparedness Index 2021.

In light of the above, it is hardly surprising that Karnataka bears home to 400 Fortune 500 companies.

Maharashtra

Maharashtra, famously known as the ‘gateway of India’, is the second-most populous and 3rd largest state in India. It is known as the country’s commercial and industrial hub and is home to India’s one of India's most industrialized region, the Mumbai-Pune belt.

Mumbai, Maharashtra’s capital city is known by multiple names, indicating the multitudes of opportunities this city has to offer. It is called the ‘City of Dreams’, perhaps as an ode to its economic prosperity and being home to Bollywood. Also known as ‘the Financial Capital of India’ because of its widespread financial clout and presence of stock exchanges and financial companies, Mumbai is one of the foremost destinations for incoming foreign investments.

Tourism is a major sector for Maharashtra- from beaches and caves to mountains and monuments. Another promising sector in this state is textile and garments. It is one of the top producers of cotton, silk, and other fibers. Naturally, this state is second in terms of the highest FDI equity inflow of $12,226.15 million for C.Y. 2021.

Delhi

Delhi is India’s capital for many reasons- it is one of the most urbanized and fastest growing regions of the country. Investors can find Delhi to be known for sectors like agri and food processing, tourism and hospitality, and Information Technology, among others. It offers a host of investment opportunities such as:

  • There are 200 opportunities in the booming real estate sector. Close to 75% of these are in the residential space which has witnessed huge demand due to Delhi’s ever-growing population, migration from other states, and the emerging middle class.
  • The state hosts the largest metro rail network in India. Due to its scope and potential, there are compelling opportunities to invest in Phase 3 of the development project for the Delhi Metro.
  • Delhi is well connected with its neighboring states and the rest of the world. Investors can find it enticing to invest in the development of Regional Rapid Transit Systems for the following:
    • Delhi-Gurugram-SNB
    • Delhi-Ghaziabad-Meerut
    • Delhi-Panipat, etc.

Delhi also houses the headquarters of important government departments and ministries.

Tamil Nadu

Tamil Nadu ranks 2nd in terms of the highest GDP across all Indian states. It provides a compelling investment destination for foreign investors as it harbors the highest number of factories and operational SEZs in India. It is one of the top 10 manufacturing hubs of the world, renowned for producing automobile and auto components, aerospace manufacturing, and electric vehicles. In addition, the state is recognized as 2nd in India for manufacturing Computer, Electronics, and Optical products. In fact, the state has two Special Economic Zones (SEZ) for the Electronics and Hardware sector. Renewable energy is another promising sector of the state, with the capacity to generate 16 GW of renewable energy- the highest in India.

While the 4 states listed above received the highest FDI equity inflow in the past year, there are several other closely competing states on the list. Gujarat, for example, is another Indian state to look out for in relation to its high rankings on several competitive indices like export preparedness, State Startup Ranking, and Ease of Doing Business. Considering Haryana, Telangana, Punjab, and West Bengal, the list of enticing opportunities in India are endless. Thus it is hardly surprising to observe that overall India was the recipient of US$ 74.01 billion in total FDI inflow. With the government’s increased focus to enhance the ease of doing business in India and the emerging market that the country boasts of, India is poised to witness further development opportunities and both in existing and emerging sectors like artificial intelligence and cyber tech in which Indian states will play the key role.

This has been co-authored by Devika Chawla and Muskan Hashim.