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Lobbying goes global

New Delhi, June 23: The two economic superpowers — the US and the European Union — are pressuring India to open up its markets wider by lowering import tariffs and relaxing limits on foreign direct investment.

“We are trying to get India to agree to this at multilateral forums (such as the World Trade Organisation) as well as bilaterally,” said Francisco da Camara Gomes, the European Union (EU) ambassador.

With the budget 16 days away, the lobbying has intensified to bring down duties on specific goods which these trading giants feel are unjustly taxed as well as to relax investment limits, particularly in banking and telecom.

The US assistant trade representative Ashley Willis has sought easier market access for the US in fertilisers and food products. The US has been keen on India opening up to food imports, among other things, which can well raise the political temperature in northern India, home to the country’s nascent food processing industry whose development has seen prices of many farm products rising here.

The EU has been lobbying the Indian government to bring down the plethora of taxes on imported spirits.

“Let’s see what happens in this budget... the taxes are skewed and the large numbers of them have a cascading effect,” said Gomes.

The European Union has pointed out while the EU is India’s largest trading partner, India is its 14th trading partner, way below China, Brazil and South Africa, and gets just 0.2 per cent of its investments abroad.

It wants “India to continue to speed up economic reforms. India needs to tackle high and discriminatory (import) tariffs and taxes, numerous non-tariff barriers, investment restrictions, lack of patent protection as well as major improvements in infrastructure.”

These demands have been made in a communication to the government.

Both know India has high stakes in the market for services and goods that are being outsourced from the West.

Consequently, the bargaining chip for more market and investment access is outsourcing, against which domestic pressures are building up in parts of the West.

“A ‘no’ to one is linked to the other,” agreed finance ministry officials. “It is always tit-for-tat in global economic diplomacy.”

In fact, the US made this clear in more ways than one today. Its trade officials told the government that any global agreement on reduction of farm subsidy in the developed world must include matching market access for their farm produce in developing countries.

“'We are prepared to eliminate all export-subsidy and reduce trade-distorting domestic support but in return for this we need to tell our farmers that they will get more opportunities of market access,” Wills said.

His plain-speak on market access comes 48 hours after commerce minister Kamal Nath assured Left parties that his government would not compromise farmers’ interests.

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