European Union trade commissioner Peter Mandelson said a free trade agreement (FTA) with India will help “shore up” global demand if the world econo-my cools.
“Reinforcing strong Indian economic growth is now an integral part of maintaining global economic demand and a healthy global economy,” Mandelson told the eighthEU-India summit in New Delhi on Thursday.
“Business on both sides should throw its weight behind a deal that does justice to the ambition we brought to the table a year ago.”
India, the world’s fastest expanding major economy after China, is looking for new export markets to maintain record growth. An agreement with the 27-member EU, which Mandelson said may be reached by the end of 2008, will lead to lower tariffs and increase trade between the two, which currently stands at $56.6 billion (Rs2.25 trillion).
“The India-EU FTA will not only spur India’s economic growth, it will also pick up the slack in other parts of the world,” Mandelson said. “The India-EU FTA will have a valuable role in stimulating not just the Indian economy but it also has a global role.”
Mandelson said an FTA could provide a strong boost to the Indian manufacturing sector through new access to the European market and by making European industrial exports to India cheaper. Only seven million Indians work in manufacturing, compared with 100 million in China, he added.
A successful conclusion of the World Trade Organization’s Doha Round of talks would also provide a boost to the global economy, commerce and industry minister Kamal Nath said.
“At this moment of global economic uncertainty, one antidote to that is a successful Doha Round,” Nath said. “We do need as much of Europe as a rule-based multilateral system.”
Nath reiterated India’s stance that the EU should cut its subsidies before India opens its agriculture market. “The Doha Round is a development round. It is not about perpetuating the distortions in agriculture trade,” he said.