Despite an upgraded status for India as a trade partner and a new Airbus deal on the table, India and EU squabbled over market access.
India says the EU is blocking shrimp imports
The European Union Wednesday called on India to open its markets to agricultural products like wine, while India shot back that the 25-nation block should not be so fussy on rules for shrimp imports.
"I believe sincerely that India will be a winner from greater openness," European Union Trade Commissioner Peter Mandelson told a gathering of business leaders at an India-EU summit.
India's minister for commerce and industry, Kamal Nath, however, told the business leaders that the European Union is using non-tariff barriers to block imports from India such as shrimps and herbal remedies.
"Peter is badgering us that we are not giving them market access," he said.
India wants farm subsidies cut
At an India-EU business summit attended by British Prime Minister Tony Blair, who holds the six-month EU presidency, and Indian Prime Minister Manmohan Singh, the issue of farm subsidies was raised again.
More access for European wine, please
Onkar Kanwar, president of the Federation of Indian Chambers of Commerce and Industry, said the 320 billion dollars the EU spends a year on farm subsidies should be cut so Indian farmers can sell into the market.
"You need exactly what we produce," Kanwar said.
Singh also raised the farm subsidy issue and that of non-tariff barriers preventing the sale of farm products from India, which he said was crucial to lifting millions out of poverty here.
"I believe there is a perception in Indian trade and industry circles that the European market is becoming increasingly difficult to penetrate. As tariff barriers disintegrate, non-tariff barrier suddenly come up," Singh said.
"India is one of the largest producers of agricultural commodities... the famous Basmati rice and the equally famous Darjeeling tea... but many of these are also products which find some form of discrimination and trade protection" in the EU."
Blair did not discuss the issue. In June, he angered some European leaders with calls for cuts in farm export subsidies, warning that failure to make progress would harm world trade talks in December.
Both want increased trade
The EU is India's largest trading partner and the destination for a quarter of Indian exports. However, Mandelson noted that efforts by both sides should be to increase trade.
Despite dispute, meetings are going very well, officials say
"India is the EU's 12th trading partner, a volume that stands at an impressive sounding 33 billion euros ($41.3 billion)," Mandelson said. "Impressive, that is, until you realize that the figure for Korea is 48 billion (euros), for Russia 126 billion and for China 175 billion. These frankly are sobering comparisons."
The EU-India summit is an annual event, but never before in its history has the European Union sent such a high-ranking delegation to New Delhi. This time, Blair, who holds the rotating presidency of the EU, was accompanied by European Commission President Jose Barroso, as well as a host of commissioners and business leaders -- a delegation befitting a nation that is widely regarded as one of the world's up-and-coming economic powers.
India rises in trading status
The summit, which saw the signing of a so-called "action plan" setting out the way forward in political, trade and investment, economic, and cultural and academic relations, effectively put India on a par with other EU partners such as US, China and Russia.
"It is in my opinion long overdue," said Blair, referring to the joint action plan. "It sets a framework for more action on a whole range of issues…such as science and technology."
Indian Prime Minister Manmohan Singh was equally upbeat about the talks with European leaders.
"We had extremely good and productive discussions," the Indian premier said. "The most important outcome has been the adoption of a joint action plan … which provides the framework, a road map for identifying pathways for future cooperation."
Airbus deal announced
One key business deal has already been inked with India's purchase of 43 planes from European aircraft maker Airbus for 1.76 billion euros. The aircraft would boost the fleet of state-run Indian Airlines, which mainly flies domestic routes but also heads to some regional, Middle Eastern and Southeast Asian destinations.
The Indian Airlines board had agreed on the acquisition of 20 Airbus A-319s, 19 A-321s and four A-320s more than two years ago but a final decision had been delayed by required clearances from several layers of the government because of the order's size.
A ministerial panel led by Finance Minister P. Chidambaram held final price negotiations on Tuesday with Airbus for the purchase of the 43 planes.
"We all know that the Airbus has been highly successful aircraft around the world," Blair said, adding the purchase was a welcome sign of growing trade relations between the European Union and India.