A Study of Bilateral Economic Relations

Chapter-1Introduction T he positive impact of international trade on economic growth has been widely documented from both a theoretical and empirical point of view. The classical and Neo-classical economists’ believed that participation in international trade could be a strong positive force for economic development. There are so many reasons that support the role of international trade to economic development. One of such approach of export trade to development is to concentrate on the industrial sector that is the core of international trade1. Developing countries learn from imported technology and also from technological progress embodied in imported goods. This learning increases domestic stock of knowledge and, hence, domestic productivity and growth. Thus, one could argue that the greater the trade volume is, the more knowledge can be potentially accumulated. Technological progress makes possible to produce goods of increasing quality at each time lower costs 2. Therefore, international trade can potentially play a crucial role in fueling economic growth of less developed countries. In other words, it can become one of the engines of growth for a country. 1.1 Foundation of Research Study Bilateral economic relations refer to the economic relations between two nations. In the current global scenario, countries can no longer afford to restrict economic activities within the home economy. With the growth of globalization and liberalization, countries find it advantageous to forge economic relations with other nations. Bilateral economic relations help developed nations to access the markets of developing countries. This is beneficial for the industries 1 of the developed nations as they can penetrate the markets of various countries. Developing nations like India has also gained significantly from bilateral economic relations with other countries. (a) Economic Relations : Bilateral economic relations play a strategic role in the growth and development of an economy. Some of the major benefits of bilateral economic relations are advantages of lowering cost due to technology transfers, economies of scale and employment. Many countries across the globe have established strong bilateral economic relations with other countries. The biggest advantage for the developing nations from bilateral economic relations is in the form of employment generation. With the inflow of capital to these countries, economic activity is boosted resulting in the growth of the economy. In the case of undeveloped economies, bilateral economic relations help them to get economic aid and loans for development projects. One of the major components of bilateral economic relations is bilateral trade. The trade of goods and services between two countries help both the participating countries to reap benefits by exporting goods and services which are produced in excess and importing those where there is a shortfall. Bilateral trade brings down cost of production of those goods and services for which there is comparative disadvantage in an economy. In this era of globalization, many countries have opened up their economy to foster bilateral trade. Regulatory relaxations alongwith relaxations in import excise and customs play an important role in bilateral trade. Several bilateral trade agreements have been signed between nations. Another important aspect of bilateral economic relations is FDI. Inflow of foreign direct investments has proved to be beneficial for many developing countries. Many countries across the globe have undertaken liberalization 2 policies to attract foreign direct investments for the development of the economy. This is also beneficial for investors since they can invest in countries from where they can get higher returns. Bilateral economic relations also help countries to get loans and economic aid from other countries during times of need. This is especially beneficial for developing and underdeveloped countries.3 (b) Basic Principles of World Trading System : One of the basic principles in the world trading system is the principle of nondiscrimination. This principle provides for the prohibition of discrimination by a country between its trading partners and discrimination between its own and foreign goods. This principle is applied in relation to like products. Thus, the principle of non-discrimination has two aspects: the Most Favoured Nation (MFN) rule and the National Treatment rule. ‘The MFN rule requires that a product made in one member country be treated no less favourably than a “like” good that originates in any other country.’ The rule of most favoured nation has been in existence for hundreds of years. In the words of Jackson, most favoured nation clause apparently have at least seven hundred- years history in trade agreements. However, the clause was brought to the multilateral trading arena following the coming into picture of the 1947 General Agreement, GATT.4 1.2 Objectives of the Research Study : The European Union is one of the largest trading partner of India in goods and services. It is a large source of FDI inflows and technology transfer. India needs FDI and technology in infrastructure and manufacturing and thus there are strong complementarities. India’s low-cost educated workforce can 3 Given this background.3 Nature and Significance of Research Study : During the last twenty five years. Trade and economic relations with the European Union have always been very important for India. India is a relatively high tariff country and has other forms of market protectionism such as restrictions on foreign direct investments (FDI). due to which India and European Union trade has grown at a slower pace than India’s total trade. 4 . Even though the EU is one of India’s largest trading partners in goods. India’s trade with the EU has increased. (ii) To evaluate the role of European Union in Foreign Direct Investment (FDI). France. but in relative terms it is decreasing. Both economies are strong proponent of multilateral liberalization and in recent years are actively engaged in bilateral negotiations. the study has the following objectives : (i) To examine the recent trends of bilateral trade and to assess the impact of European Union on Indian external trade .complement the ageing population of many EU member states such as Germany. 1. its share is declining. India and the EU also have commonalities in terms of multi-cultural democracy and quasi-federal governance structure. in absolute terms. and (iv) To analyse the ways and means for stronger bilateral trade relations between European Union and India. Italy. the process of European economic integration and economic liberalization in India has created tremendous opportunities for European Union and India. (iii) To highlight the major problems and difficulties’ faced by both sides for removing the bottlenecks of trade relations. Netherlands and Sweden. There are several reasons. Although. The trade arrangements and agreements range from informal working groups to customs unions and include anything from safe investment guarantees to environmental agreements. BITs are not 5 . The road to a FTA is usually long and bumpy – a few FTAs are concluded and effective within 3 years of the first round of FTA negotiation rounds and more than a few of those talks have taken over a decade5. 1.4. 1. numerous types of arrangements and agreements between countries have been established. These types of agreements include:  Bilateral Investment Treaty : A Bilateral Investment Treaty (BIT) provides investors with various guarantees when investing in the country of the treaty partner.4 Theoretical Exposition of Trade Agreements: Over the last decades. or perhaps well-known. For this. agreements are Bilateral Investment Treaties and Free Trade Agreements.The European Union is India’s vast market for agricultural goods but the potentiality does not get fully exploited because of high level of protection in the form of Non Tariff Barriers (NTB). In this context the present study analyses the EU’s tariff and non tariff barriers to India’s export. The BIT partners commitment is basically extending security on investing to foreign companies and individuals.1 Agreements without Duty Reduction : Many of the Trade Agreements that do not include duty reduction schemes are actually completed with the objective to complete a Free Trade Agreement in the future. The most common. Intellectual Property Rights are part of most if not all agreements. the study calculated International Revealed Comparative Advantage (IRCA) for both India and European Union by using the Balassa index. g. investment and economic cooperation. the transfer of capital and investment income. The Agreement can and usually does include a section on the objective to create an FTA 6 .g. TIFAs are mostly negotiated with countries that are in the beginning stages of opening up their economies to international trade and investment.  Economic Partnership Agreement EPA : The EPA agreements are comprehensive in scope. trade in services. they are merely common courtesy agreements for financial security. e. for example.: Switzerland–Colombia signed in 2006. over 2.  Trade and Investment Framework Agreement : A Trade and Investment Framework Agreement (or TIFA) is a trade pact that establishes a framework for expanding trade and resolving outstanding disputes between countries.necessarily an agreement that is the start for further reaching agreements. e.  Economic Framework Agreement : An Economic Framework Agreement is typically an agreement that highlights cooperation and promotion at various levels and in various areas.g. Currently.: CARICOM–Chile.g.  Joint Commission : A Joint Commission (JC) is a forum where members of the JC discuss opportunities to advance cooperation between the members. compensation for expropriation and procedures for settling disputes. technology.: Canada–Argentina  Foreign Investment and Protection Agreement : The main provisions of the Foreign Investment and Protection Agreement (FIPA) cover the handling of foreign investments by the host country. because they either were traditionally isolated or had closed economies. e.g. e. covering such fields as trade in goods. or environmental issues. Japan–ASEAN. on economic cooperation..: Australia–Egypt.000 BITs are in place e. Within the type of agreements. Typical areas included in the agreement are : trade facilitation (inspection.  Free Trade Agreement/Regional Trade Agreement : Free Trade Agreements or Regional Trade Agreements are agreements between two or more countries that regulate duty reduction schemes. 1.g. promotion).  Partnership Cooperation Agreement : The aim of the Partnership and Cooperation Agreement (PCA) is to encourage political. commercial.: BIMSTEC. ECA’s can be regarded as a partial FTA or a partial preferential agreement and are very common in Latin America. e.g. commercial and economic relations and institutes political communication up to the highest levels.: Australia–China EFA.4. cooperation.g. The EU–Russia PCA covers trade.  Economic Cooperation Agreement : An Economic Cooperation Agreement typically includes duty rate provisions and also supports language with regard to trade facilitation and increased levels of cooperation between signees e.: EU and Russia. These types of agreements include :  Economic Completion Agreement : The ECA is typically bilateral and covers only specific sectors/products.feasibility study. quarantine. the conditions 7 . e. economic and cultural cooperation. the level of reductions and scope can also vary. Agreements with Duty Reduction : Agreements with duty reduction schemes vary both in range of duty rate reduction and scope outside duty rate reductions. Partial or full duty reductions are the main components of the agreement.2. 1. The most common programme is the General System of Preferences (GSP). Bilateral trade agreements are. common external tariffs are in place where Customs Unions are established. Bilateral and Multilateral Trade Agreements : Recent years have witnessed a shift in regional economic cooperation strategy from multilateral to regional and bilateral cooperation agreements. The incentives typically include reduced duty rates.under which the duty reduction can be applied. unilateral initiatives are offered to developing countries or countries that are encouraged to steer away from export of illegal drugs.  Common Internal/External Tariff : A common internal tariff is set up when countries that signed a particular agreement set up a single tariff for shipments originating in and destined for countries party to the agreement. Typically. quotas and other restrictions on trade between them. as the name suggests.5 Unilateral. A common external tariff means shipments from non agreement countries into agreement countries are classified in the same external tariff and the duty rates applied are identical notwithstanding into what agreement country the import takes place. 6 Unilateral trade agreements are trade incentives an importing country offers in order to encourage the exporting country to engage in international economic activities that will improve the exporting country’s economy. A bilateral trade agreement is an agreement entered into between two countries under which the participants agree to reduce tariffs. for which the exporting country will qualify if certain thresholds are met. and often times include additional agreements regarding trade facilitation. 8 . Typically. bilateral in character7. The first such set of rules came in 1947 in the form of the General Agreement on Tariffs and Trade (GATT). GATT was replaced in 1995 by the World Trade Organization (WTO). which has more than 150 members. SAARC (South Asian Association for Regional Cooperation). The WTO agreements cover goods. They are usually intended to lower trade barriers between participating countries and. are some of the multilateral trade agreements constructed geographically. Although multilateral trade existed earlier. services and intellectual property. There are many multilateral trade agreements between countries. as a consequence. increase the degree of economic integration between the participants. The multilateral trade agreements can be formed in regional basis also. Although India has been a strong supporter of the multilateral trading system. for the development of economy of each member countries signed in each multilateral trade agreement. One explanation for this is that the WTO has become increasingly slow and comparatively ineffective as a means of establishing a system of free trade between countries. they have also become 9 . Article 13 of the UN Charter 9 states that the UN General Assembly shall: […] initiate studies and make recommendations for the purpose of promoting international co-operation in the political field and encouraging the progressive development of international law and its codification8.. it started taking a keen interest in the increasing regionalism around the world in recent past. As the trade rounds of the WTO have become more liberal and sought to address wider issues.A multilateral trade agreement involves three or more countries who wish to regulate trade between the nations without discrimination. NAFTA (North American Free Trade Agreement) etc. Multilateral trade agreements are considered the most effective way of liberalizing trade in an interdependent global economy. it was only after World War II that nations recognized the need for a set of rules with the objective of securing market access for postwar recovering economies. worldwide regionally. The total cumulative number of India’s proposed or existing RTAs/FTAs is 31 of which 21 are with countries in Asia and the Pacific region. Among the first preferential trading agreements in Asia was the Bangkok Agreement of 1975 of which India and Korea. India has joined various other regional trading arrangements9. Currently. Thereafter. among other countries. were founder members. India is among the top most countries having RTAs/FTAs either in place or under negotiation.more lengthy and difficult to conclude. 10 . Malaysia CECA 11 Asia Pacific Trade Agreement (APTA) . Myanmar. Cambodia. Thailand and Vietnam) 8 India . Mexico. Guinea. Pakistan. Singapore. Ghana. Nigeria.Early Harvest Scheme (EHS) 6 India . No 1 Table1. India. Sri Lanka) 12 Global System of Trade Preferences (G S T P)-(Algeria. Pakistan. Viet Nam. Trinidad and Tobago. Republic of Korea. Sri Lanka. Brazil. Morocco. Chile. Venezuela. Egypt. Benin. Zimbabwe) 13 India .Bhutan Agreement on Trade Commerce and Transit 5 India . Laos. Indonesia. Singapore.1 India’s Engagements in Regional Trading Agreements I. Republic of Korea. Bolivia.Trade in Goods Agreement (Brunei.S. Ecuador. Philippines.Thailand FTA . Argentina. Nicaragua. Sri Lanka.South Korea CEPA 9 India .Japan CEPA 10 India . Tunisia. Yugoslavia.Sri Lanka FTA 2 Agreement on SAFTA (India. Colombia.Singapore CECA 7 India . Indonesia. Tanzania. China. Romania. Nepal. List of India’s 15 FTAs / PTAs already in force Name of the Agreement India . India.(Bangladesh. Democratic People's Republic of Korea.Afghanistan 11 . Philippines. Bhutan and the Maldives) 3 Revised Agreement of Cooperation between Government of India and Nepal to control unauthorized trade 4 India . Mozambique.CECA . Thailand. Guyana. Malaysia. Sudan. Peru. Iran. Myanmar.ASEAN. Iraq. Cuba. Bangladesh. Malaysia. Cameroon. Libya. Bangladesh. 14 India – MERCOSUR-(Argentina. Brazil.Chile 12 . Paraguay and Uruguay) 15 India . Estonia. India . Name of the Agreement and Partner Countries 1. Liechtenstein and Switzerland) 7. Malta. Greece. Qatar and Yemen. Lesotho. Malaysia. India . Indonesia. Myanmar. India – Israel FTA 9. Botswana. India – Chile PTA 13.II List of FTAs / PTAs under negotiations S. Slovakia. Thailand. Germany. India . Cyprus. France. United Kingdom) 2. Denmark. India . India . Swaziland and Namibia) 11.Mauritius CECPA 6. Philippines. Italy. Ireland. Finland. Spain. Portugal. Poland. India – Gulf Cooperation Council (GCC) Framework Agreement (Saudi Arabia.MERCOSUR PTA (Argentina. Luxembourg. Kuwait. India – Southern African Customs Union (SACU) Preferential Trade Agreement (PTA) (South Africa. Paraguay and Uruguay) 12. Thailand and Vietnam) 3. Netherlands. Bulgaria. Oman.ASEAN CECA. Czech Republic. No.Singapore CECA (Second Review) 10.EFTA BTIA (Ireland. Brazil. Romania. Latvia. Cambodia. Slovenia.New Zealand FTA/CECA 8.Services and Investment Agreement (Brunei. India – Sri Lanka CEPA 4.Thailand CECA 5. Sri Lanka. Lithuania. Sweden. Norway. Hungary. India. India . India . Laos. Bhutan and Nepal) 14. BIMSTEC CECA (Bangladesh. Myanmar. Belgium. Bahrain.) 13 . Singapore.EU Bilateral Trade and Investment Agreement (BTIA)-(Austria. India . 14 .Indonesia Comprehensive Economic Cooperation Agreement (CECA) 17. of India.15. India . India – Canada CEPA 16. Govt. Ministry of Commerce and Industry. India-Australia CECA Source: Annual Report 2012-2013/ Department of Commerce. In this context. India was one of the first developing countries to establish relations with the European Economic Community (EEC).2% of the EU's total imports. The EU is India's largest trading partner accounting for approximately € 96. After the economic reforms of the early nineties. 15 . Though economic relations between India and EU have been strengthening. Relations between the European Union and the Indian sub continent have a long history that reaches back to the establishment of the first official contacts at the beginning of the 1960s. Import restrictions on many items were lifted which led to expansion of India’s economic relations with other nations.6% of EU's total exports and 2.10 EU-India trade relations have progressed tremendously over the last several years. the current size of trade and investment between the two economies is relatively low compared to the size and structural complementarities of the two economies. the present research work is an attempt to analyse trade and investment relations and to explore future areas of potential economic co-operation between India and European Union.1. Bilateral trade in goods alone rose by 20% between 2010 and 2011. up from 15th in 2002. India ranked 8th in the list of the EU's main trading partners in 2010.The EU accounted for 19% of India's total exports and 14% of India's total imports in 2010. India accounts for 2. the Indian economy was opened up to further bilateral trade relations with various countries and to foreign Direct Investment (FDI).6 India’s Economic Relations : India has important and strong economic relations with many countries in the world.3 billion in trade in goods and services in 2013 11. On the other hand. UNCTAD. trade related magazines and Commission of European Union. New Delhi. World Development Indicators. Delhi School of Economics. of India. World Bank.J. ii. Indian Institute of Foreign Trade. v. Annual reports. Ratan Tata library. on the basis of nature of the research. iii. For the present study. Bareilly etc. various issues. Periodical Reports. Hand book of statistics on the Indian Economy. ICRIER. Government of India. The data was extracted from the following sources : i.P. It should include not only the relevant aspects of the plan of the study but also the possible instrument for the conduct of research in the process of finding solution to the problem. various issues. Jawaharlal Nehru University. Ministry of Commerce and Trade Govt. Central library M. Rohilkhand University. RBI.1.7 Research Methodology and Sources of Data: The research methodology constitutes all those methods. ICSSR New Delhi. data structure is largely based on secondary data. For any type of research methodology the important as well as crucial aspect include the rationale in choosing the research design. vi. New Delhi. various issues Economic Survey. The researcher also consulted libraries of School of International Studies. 16 . iv. publications of Ministry of Commerce. WITS. Ministry of Finance. which are used by the researcher in the fact-finding mission. 8 Plan of the Study: Chapter 1: Introduction The areas covered in this chapter are as follows:  Foundation of Research Study  Objectives of the Research study  Nature and Significance of Research Study  Theoretical Exposition of Trade Agreements  Unilateral. The researcher has used some specific techniques to establish relationships between a set of variables. 17 . Sources of Data and Statistical tools. Chapter 2: Review of Literature This chapter comprises a review of the major works done in the area of Economic Union. Bilateral and Multilateral Trade Agreements  India’s Economic Relations  Research Methodology. time series and Revealed Comparative Advantage method. pie diagram. India’s Foreign Trade and Bilateral trade Relations. These techniques include measures of central tendency. the researcher has used various statistical techniques for the analysis and interpretation as well as presentation of data. 1. Besides this histogram. Data have been arranged in the proper form according the needs of the study.Statistical Tools : During the course of the study. and several other methods have been used for the presentation of data. Top 10 commodities exported to EU Chapter 6: Findings and Recommendations 18 . Foreign Direct Investment (FDI) flows and service sector are also examined.Chapter 3: Background Interlinkages of India and European Union. Chapter 5: Shifting Paradigm of Trade Diversions The issues that have been studied in this chapter are     Revealed Comparative Advantage RCA of India Revealed Comparative Advantage of European Union. the trade relationship between the EU and India i. composition and volume of trade is reviewed and analysed. direction.e. The issues that have been studied in this chapter are:      Background of India. pattern.EU economic Relations History before the formation of EU Rome Treaty Institutions of the community Brief political economic history of India Chapter 4: Analytical Framework of Bilateral Trade Relations In this chapter. In addition. 6 Asian Development Outlook. The full text of the UN Charter can be found at http://www. 3 Economy Watch-“Bilateral Economic Relations”. 7 Liz Brownsell Allen & Overy “Bilateral and Regional Trade Agreements” Advocates for International Development (2012). 3rd ed. Tusveld. “Trade and the Transmission of Technology. 1945. The WTO: Functions and Basic Principles. van de Heetkamp and R. J. 8 Article 13. Economic Development. and India-Singapore CECA.ASEAN CECA. India-Chile PTA. Currently. Rules of origin in Free Trade Agreements” 7-6. Trade and the WTO. India-Israel PTA. 5 A. (2011) and World Trade Development Report. (2002). W. HarperCollins 2 Keller. in Development.References 1 Hogendom.” Journal of Economic Growth. Charter of the United Nations. 29 June. 2010. 9 These include agreements such as the India-Sri Lanka FTA. and India-GCC framework agreement on economic co-operation. India-Japan CECA/CEPA and India-Korea CECA etc. The World Bank. SAFTA. India is in the process of negotiating several other regional and bilateral trade agreements such as India. IndiaThailand FTA. 5-24. 4 Hoekman. Washington DC (2002). 2007. BIMSTEC FTA. (1996). (2002). (2011) “Origin Management.org/aboutun/charter/.S. India has set 19 . India-Australia Trade and Economic framework agreement. Apart from these. 7.un. etc 10 Cyril Berthod.europa. Indonesia.India and the European Union: Evolution and interlinking issues of a multi-level relationship. Malaysia. June 19. 11 ec. 2011. 20 .up various joint study groups to see the feasibility of economic cooperation with several countries like China.eu/trade/policy/countries-and-region/countries/india. We take up the combination of different aspects to make general conclusion by the views of various economist. 2.Chapter-2 Review of Literature When we study the relationship between India and European Union. and can be expected to make an equally big contribution in the future if it is allowed to proceed freely".This part covers various reviews relating to India’s Foreign Trade.1 Studies Related To Foreign Trade: The argument concerning the role of foreign trade as one of the main deterministic factors of economic growth is not a recent topic. EU-India Economic Relation. A brief glance at this topic is essential for clear and proper understanding from early time to the present age which is primary concern of this thesis. Now we take up each part to discuss separately. It goes back to the classical-economic theories by Adam Smith and David Ricardo. As review of literature in the present study has been divided into three parts respectively. 21 . who put their thought that international trade plays an important role in economic growth and that there are many economic gains from specialization . Haberler1 says: "International trade has made a tremendous contribution to the development of less developed countries in the nineteenth and twentieth century’s. Studies Related to Foreign Trade. Studies Related To Economic Union. Trade is preferable to aid as it could evoke dynamic responses to competitive opportunities that would reinforce the growth process. The study also showed the importance of liberal market policies by pursuing export expansion strategies. Vohra6 showed the relationship between the exports and economic growth in India. and a buoyant growth in the seventies. Da Costa3 demonstrates that the world’s demand has severely constrained Indian export. the Hecksher Ohlin “hypothesis” that a country’s exports use intensively the country’s abundant factors of production. constraints on output as result of changes in import licensing and changes in domestic demand. and there was a temporary decline during 1965-67.production. Subasat4 investigated the empirical linkages between exports and economic-growth. They are in different shapes as. Philippines. changes in material supply. Bharadwaj5 sought to test empirically. and by attracting foreign investments. and Thailand between the period of 1973 to 1993. Changes in productive capacity and changes in 22 . The stagnation was followed by moderate expansion during 1960s. Pakistan. The study further showed that export promotion does not have any significant impact on economic growth for low and high income countries. The study suggested that the more export-oriented countries like middle-income countries grow faster than the relatively less export-oriented countries. Frankena7 says that there are four types of changes that influenced export performance in the country. Malaysia. with the help of Indian data.Nayyar2(1977) revealed that India's falling share in the world market could be due to the declining share of exports in domestic. The empirical results indicated that when a country has achieved some level of economic development then the exports have a positive and significant impact on economic-growth. an all encompassing and comprehensive view needs to be taken for the over-all development of the country's foreign trade. credit market frictions lead to one country facing a higher interest rate or rationed credit compared to other countries. These are to double our percentage in share of global merchandise trade within the next five years. and to act as an effective instrument of economic growth by giving a thrust to employment generation. Kletzer and Bardhan8 show that countries with relatively well developed financial sector have a comparative advantage in industries that depend on external finance. They presumed that more sophisticated manufactured finished goods require more finance to cover selling and distribution costs than primary or intermediate goods. They revealed that even when technology and endowments are identical between the countries and economies of scale which are absent. The Foreign Trade Policy was built around two major objectives. or no effects upon trade flow. Delis and Zilberfarb9 have argued that high volatility of exchange rates may theoretically exert either positive. She was of the opinion that the new trade policy was of immense use to India's foreign trade. They suggest that the impact depends upon several important key factors including the relative strength of income and substitution effects and the degree of risk aversion of the trader.explicit exchange rates on exports as a result of export subsidization and devaluation. This may lead to differences in comparative advantages in processed goods which require more working capital. 23 . The EXIM policy was renamed as the new Foreign-Trade Policy. negative. Katti10 points out that for India to become a major player in world trade. marketing cost or trade finance. defined a set of analytical phases with reference to the EXIM policy of a country.Phase four continues liberalisation introduced in Phase three and goes a step further. and provides the evidence that the unidirectional Granger causality runs from exports to economic growth Raju and Kurien14 (2005) analyzed the relationship between exports and economic growth in India over the pre-liberalization period 1960-1992. Phase three is to systematise the changes. Rangasamy13 (2008) examined the exports and economic growth relationship for South Africa. in response to an unsustainable balance of payments deficit. The results showed the significant positive relationship between exports and economic growth. These phases in the foreign trade regime were designed essentially as a descriptive device to capture meaningfully the evolution of foreign trade regime in terms of its restrictions content and the dimensions and pattern of its use of control and price instruments. Phase one is characterized by the systematic and significant imposition of quantitative restrictions (QRs). This study provides the evidence of export-led growth hypothesis. introduced during phase two. There will be full convertibility on current account.Bhagwati and Krueger11(2007) in their comparative analysis of the impact of foreign trade regimes and economic development in a number of countries. There are broadly five phases. and 24 . and initiate liberalization . and quantitative restrictions will not be employed as a means of regulating the balance of payments Erfani12 (1999) examined the causal relationship between economic performance and exports over the period of 1965 to 1995 for several developing countries in Asia and Latin America. Phase two is characterised by continued reliance upon quantitative restrictions and generally increased restrictiveness of the entire control system. Phase five occurs when the exchange regime is virtually liberalised. ”18 He further discuss current transactions. Viner has introduced the concept of trade creation and Trade Diversion. capital. defining trade creation as a shift in trade from a high cost to a low cost producer and trade diversion as a shift in the reverse direction. regardless of social and cultural differences. The economy is not integrated unless all events are open to everybody and remunerations paid for the productive services’ are equal. His theory was concerned with a static analysis of the welfare effects of Customs Union.”15 Mikesell has stated that “the criterion of a customs Union or free trade area involves relatively long time periods for fruition so that the initial impact and perhaps the most important one. balance of payments etc. International economic integration relates to the optimum of international economic cooperation. It sometimes is the basic aspect.2 Studies Related To Economic Union: The basic frame work for the theory of economic integration was provided by Jacob Viner. mechanism of financial transactions.”17 According toTinbrgen “International cooperation is possible in almost every field of human activity. Viner was of the view that “A customs Union increases world welfare through free trade. international movements of factors of production like labour. with and without an error-correction term 2. In order to demonstrate this. Economic cooperation is only one of its aspects. is on expectations regarding future market opportunities rather than on existing trade patterns”16 According Myrdal “Integration can be regarded as a social and economic process destroying the barriers between the participants’ economic activities.found strong support for unidirectional causality from exports to economic growth using Granger causality regressions based on stationary variables. 25 . According to Meade, regional trading arrangement is more likely to increase economic welfare, if the economies of the members are very competitive, bur potentially very complementary.19 Hansen indicate that the backwash effect and the tendency to aggravate existing disparities in levels of development in Latin America, Africa and Asian regional economic integration experiment indicate “over politicization20. Triffin considers economic cooperation also as integration. It is rather an advanced type of cooperation as distinguished from the term “harmonization” which refers to a mutual consultation on important isues of economic policy. Integration is a process which brings about a greater degree of unity 2.3 India-EU Economic Relations: Jain17 expresses that after nine summits, India and the European Union are gradually getting used to working together. There is a widening and deepening of political dialogue and variety of consultation mechanisms on around 45 issues, which have enabled the two sides to better understand and appreciate each other's positions, perspective and perceptions. However, shared values do not necessarily translate into greater cooperation one needs to have shared interests and priorities. Mutual long-term interest is going to be in areas like scientific and technological cooperation, movement of skilled persons etc. The time to build and enhance existing frame work in now. Priyadarshi18 makes an attempt to understand that after the Free Trade Agreement (FTA) between India and European Union coming into for what will be the positive and adverse effects on IPR laws and the condition of common man in India. Sachdeva19 in his study analysis how trade and economic ties have formed the core of India-Europe relations so far with more than US$90 billion bilateral 26 trade, the EU is India's largest trading partner. Foreign Direct Investment (FDI) in India from the countries of the EU is higher than investments from the US and Japan put together. Similarly, Indian companies are also buying many European firms. Encouraged by positive trends, both the EU and India are negotiating for a broad-based bilateral trade and investment agreement. The main challenge facing policy makers on both sides is how to conclude a broad based trade and investment agreement in an increasingly uncertain European economic climate. Chakraborthy and Animesh Kumar20 in their study throw the light on the importance of Regional Trade (RTA) Agreement and on Bilateral Trade and Investment Agreement (BTIA). The urge to enhance market access has therefore forced both developed as well as developing countries to further trade objectives through RTA's, and the tendency has become more accentuated, especially over the last couple of years. The EU is the largest trading bloc in the world and has forged links with a number of developing countries through trade and partnership agreements. The proposed EU-India BTIA has many potential benefits, but it is also rife with latent problems for India. India's approach to negotiating with the EU should therefore be based on broad policies. The sector identified by NMCC (National Manufacturing Competitiveness Council) could be considered as a guideline in this context. Nataraj21 studies the effect of FTA between India and EU. The welfare effects amount to an additional 0.3 percent growth for the Indian economy in the short run and 1.6 percent growth in the long run. In negotiating any bilateral trade agreement with EU the Indian government should tread cautiously so as to safeguard domestic concerns and the public interest. If FTA structured well, the agreement could push India's growth for the next decade. If structured poorly, it could de-rail it for just as long. 27 Khorana and Perdikis22 suggested to maximize potential benefits of FTA (free trade agreement, trade barriers (tariff and non tariff) in goods and services sectors should be addressed. This must be complemented by a mutually agreeable time frame to conclude negotiations in areas where interests of the partners vary Neogi23 explains the causes behind the delay EU-India free trade agreement and suggests how two side can forge cooperation in global peacekeeping missions and co-operation to develop civil nuclear energy. Upadhyay24 studies the energy sector and scope of EU's investment in it. Investment in India’s renewable market would not only promote energy access and help fight climate change, but would also be rewarding in terms of appreciation. India offers a huge and sustainable market for European Companies. Khandekar and Sengupta25 view that the BTIA will not only help alleviate the effects of the unprecedented financial crisis, but also bolster the global case for economic cooperation against protectionism. Tharoor,26 in his article, studies the hurdles of FTA between India and EU. The main stumbling block is that India prefers bilateral arrangements with individual members states to dealing with the EU collectively because of lack of cohesion on strategic questions. Singh27 states that services are important for both India and EU. Since the 1990s, the rapidly expanding services sector has been contributing more to economic growth than any other sector. The services sector contributes nearly three quarters of Gross Domestic Product (GDP) for EU and nearly 55% of GDP for India. Sachdeva28 observes that trade and economic relations with Europe have always been very important for India. In the last two decades, the process of European Economic integration and economic liberalization in India has created tremendous opportunities for Europe and India. Despite many positive 28 Sikdar30 in a study. So there is room for improvement. and to the explanations for the lack of voting cohesion between the EU and India. An enlarged EU appears with plenty of opportunities for India. It questions whether the strategic partnership between the EU and India is truly strategic. India and the EU at the UN General Assembly. Indian policy makers are still sceptical of Europe’s role as a major strategic player in Asia. attempt to explore the potentials of having free trade between India and the EU and aims at identifying the possible gain that would accrue to each of the economies.development in the economic sphere. The article points to the EU's and India's different views about the principles and values that are to be upheld in global governance. about their different positions in the WTO. As a result. But this opportunity has been marred by the labyrinthine of NTBs. Jean-Lcu Racine33 reveals in a study that enhancing India-EU cooperation in critical areas of non-traditional security issues is an obvious necessity. By comparison. The EU's exports to India are also well below the EU's usual performance in similar markets and regions. If Europe wants to be relevant in the emerging Asian architecture. on the United Nations (UN). The European Union (EU) has not been able to put together a common foreign and security policy. both China and ASEANS exports are each about five times the volume of India's exports to the EU. Keukeleire and Bas Hoojimaaijers32 reflect on the relations between the European Union and India. the largest economic area and the fourth largest economy respectively. it has to make some hard strategic and political choices. the EU has not been able to move strongly on sensitive-issues with India. Pascal Lamy31 states that the economic link is a cornerstone in the relationship between the EU and India. Bhattacharya29 analysises the effects of the reduction of EU's tariff and non tariff barriers on India's exports. with special attention to the voting behavior. An enlarged Union means more demand for India goods in European market. erected by EU on its imports from India. There 29 . is very optimistic about FTA between India and EU. If Europe and India are to deepen their engagement. There are specific issues for which the G-20 could provide a forum for Europe and India to set the agenda. The negotiations for a bilateral FTA between India and the EU covering foreign investment.is already a sound basis for expanding existing cooperation. this engagement will need to offer clear benefit to India. and between (NTS) Non Traditional Security and other fields that are crucial to the strategic partnership. The bilateral trade between India and EU may touch $200 billion over the next 4-5 years. and ti's member states. the future of Africa is a source of challenges and opportunities for both partners. Price36 states that there is a clear-cut desire within the EU. 30 . Ambassador. competition policy and government procurement additional to trade . to engage more closely with India. In this regard. on which the strategic partnership formally is founded. primarily economic interest as the driving force behind the partnership rather than common values. as already observed in the private sector. Joao Cravinho37. but acrossanalysis of the three continents shows that there are probably many complementarities between India and EU vis-a-vis Africa and that there are good reasons to initiate triangular cooperation in many areas. 2013. Kastner34. What is lacking perhaps is a comprehensive framework under the existing agenda. to promote bilateral debate not just about the various issues already identified but also about the correlations between them. Each partner of course has specific interests with regard to the African continent. be they trade or traditional security. He explores the opportunities for enhanced cooperation between the EU and India within the framework of the G-20. Boillat35 view’s that cooperation between India and EU cannot challenges around them especially in the medium range. the investigation revealed common interest. states that EU and India both are sharing many common values. Delegation of the EU to India speech at Hyderabad. PTI Oct 21. The currently negotiated FTA between India and EU can be regarded as a in goods and services started in June 2007.Harling38 states that within the framework of the Global Europe strategy of the European Union (EU) wants to enable European enterprises to gain access to new and profitable markets in emerging nations by negotiating Free Trade Agreements (FTA). one of the biggest employers.M. (1970). will face un. Meier. Economic Times Bureau39 Jun 15. Leading Issues in EconomicDevelopment. Oxford University Press. as over the next 10 to 15 years. 2012. “Dynamic Benefits of Trade” in G. G. But EU invests 10 times more in China and its trade is 5 times larger than India. such as textile. 90% of the world demand will be generated outside Europe. Singh40 in his article. both parties developed an idea that more works are needed to be done in order to make the FTA acceptable.6% of total EU imports of goods and 0.8% of import of services. expresses his views that Trade with the EU represents almost a quarter of Indian's exports and imports. India which has about a sixth of its total exports to the European Union. which is down 20% in a year. 14 rounds of official negotiations took place after the 12th summit held in New Delhi on 10th Feb. If the Euro zone crisis is not averted. 31 . EU Crisis: Impact on India what corporate have to say: The Euro-Zone crisis has eliminated the benefits of a weak rupee. Until 2012.employment in the lower income category. 2012. But it is just 1. London. References 1 Haberler. Recession and Non-Traditional Manufactured Exports from India.. Ken and Pranab Bardhan (1987). (1965). 32 . 109-137. quoted in IGNOU. United Kingdom. October. J. Vol. pp. “Elasticities of Demand for Indian Exports – An Empirical Investigation”.Economic Development and Cultural Change. International Advances in Economic Research. New Delhi. 57-70. 7 Frankena. R. 3. July-September. pp.. 10 Vijaya Katti (2005). 3 Da Costa. 27 Nos. 41-54. Mark (1975). Cambride University Press.Cambridge. Deepak (1976).43-46. 333-349. pp. Yojana. Vol. 4 Subasat. 49 No. “The Foreign Trade Regime : Analytical Phases and ChangesOvertime”. "Foreign Trade Policy . H. T.An Appraisal". Vol. Journal ofDevelopment Economics. 3. " Credit Markets and International Trade". 5 6 R Bhardwaj Vohra.Z. 2001. Development Policy Review.5. ‘Export and Economic Growth: Further Time Series Evidence from LessDeveloped Countries’. pp. and B. 11 Bhagwati. Zilberfarb (1993).N. 20.2 Nayyar. 7. pp. MS3 Economic and Social Environment. pp. “Real Exchange Rate Volatility and International Trade: A Reexaminationof the Theory”. 8 Kletzer. 641-647. 59. 2002. Krueger (2007). India’s Exports and Export Policies in the 1960s. G. May. 345-50.C. Devaluation. Southern Economic Journal. ‘Does Export Promotion Increase Economic Growth? Some Cross-Section Evidence’. and A. 9 Delis. TheIndian Economic Journal. 1-2. pp. ‘Exports and Economic Growth in India: Cointegration. January. 2008. University of Malaysis.12 Erfani.F. International Advances in Economic Research. 21. Jacob. 18 Vaibhav Priyadarshi. "India and European Union : Perceptions and Policies" . Carnegie Endowment for International peace. G.1954. 603-617 14 Raju. and Kurien.1950. 1.K. Kuala Lumpur. 20 Regional integration: reflection of decade of theoretical efforts “world . 19 Mikesell. Harrod and Hague. 5.R. Causality and Error-Correction Modeling: A Note’. R. June.paper presented at Asia-Europe Institute.Elsevier.International Economic Integration. Indian Journal of Economics and Business.. The Customs Union Issue. 15 Viner. 19 June 2009. 2005. New York. J. 5.Journal of International Development.R. Sudhakar S. F. ‘Export and Economic Growth in Developing Countries’. 147148 13 Rangasamy. 1969 17 R.. Logan. op cit.London. ‘Exports and Economic Growth: The Case of South Africa’. "Analysing of free Trade Agreement between India and EU and its impact on the IPR laws in India" 33 . 1999. “The theory and common Market as applied to regional arrangements among Developing countries” in International Trade theory in a Developing world. Jain. New York.1963. pp. 18 Jan Tinbergen. 16 Mikesell. pp.1956. 17 Myrdal Gunnar. An International Economy. 22 Sangeeta Khorna and Nicholas Perdikis. "India and The European Union . ISSN : 2254-0482. 10 June 2012.Project-syndicate. "EU-India Bilateral Trade and Investment Agreement opportunities and challenges" in Luis Learl and Vijay Sakhuja ed. 20 Debashis Chakraborthy and Animash Kumar. 23 Prabhuddha Neogi.Sep. 20th.eurioa. 29 Swapan Kumar Bhattacharya. "EU India Free Trade make or break" AGOAR.3413567.19 Gulshan Sachdeva.Trade and Non-Tariff Barriers" Aakar Publication 2005.East Asia Farum 14th June. 181-206. 28 Gulshan Sachdeva. 25 Gauri Khandekar and Jay-shree Sengupta. "EU-India Free trade Agreement Deal or No Deal?" South-Asia Economic Journal . "India Europe relations the way Ahead) June 24. "India-EU Free Trade Agreement : Should India open up Banking Sector" 2009. "India-EU Economic tias : strongthening the care of the strategic partnership" .Paris. 27 Kavaljit Singh.iss. Asia-Europe. 2010-Vol.eu). 57-74 pub. 34 .-11 No. ISS-Paris. "www. "Why can't India and the EU sign and FTA's . "India and European Union "Broadening strategic partnership Beyond Economic link ages" Sage publication (2008) p. 21 Geetanjali Nataraj. "EU-India partnership time to go strategic-e-by Luis Learl of Vijay Sakhuja P75-86. 24 Dinoj Kumar Upadhyay. by ISS.org.Institute for security studies European Union (www. The EU-India partnership time to go strategic pp. 26 Shashi Tharoar. 1. 32 Stephan Kaukelere and Bas Heejimaaijers. 20 Sep. 40 K. June 14. Vol. "The EU-India Economic Relations" Speech at the EU-India Busness Summit on 22nd November at New Delhi India. VII. "Free Trade between India and European Union 15 : A Theoretical and Emperical Analysis" The ICFAI_Journal of Applied Economics. 35 Jean-Joseph Boillat. 39. "The Scope for economic cooperation within the G-20" Institute for security studies European Union Paris. 33 Jean-Luc Racine. Gajendra Singh “India & the European Union . India and Africa "ISBN-97892-9198208-0-P-87-99. 38 Hike Harling. 2012. "Negotiations Analysis : The Free Trade Agreement Between the European Union and India". PTI. "Beneath Potentials EU-India Relations) 2007. 2013. 35 . 31 Pascal Lamy. 2008. "EU crisis Impact on India". Ambassador. 34 Sebastian Kastner. Europe-EU.30 Chandrima Sikdar. Pearl and V. 36 Gareth Price. iss. "The potential for triangular cooperation between Europe. 37 Joao Cravinho. ISBN978-92-9198-208-0". No.New Strategic Partnership SOUTH ASIA ANALYSIS GROUP-2004. "The EU-India and Non-Traditional Security : Convergences and Challenges" Edit-by L. 2013. "Speech at Hyderabd. Sakhuja. Economic Times Bureau. Oct. FPRC-Journal-2013 (1) ISSN 2277-24647 "EU-India relations and multilateral governance where is the strategic partnership". 2 Free Trade Area : It is the form of economic integration wherein all barriers are removed on trade among members.1. 3. Canada and Mexico in 1993and the southern common market (mercosur) formed in 1991. the NAFTA formed by United States. common markets and economic unions. 36 .Chapter-3 Background Inter linkages of India and European Union 3. but each nation retains its own barriers to trade with nonmembers. customs union. The best examples are EFTA formed in 1960 by UK.1.1 Preferential Trade Arrangements : It provides lower barriers on trade among participating nations than on trade with nonmember nations. The degree of economic integration ranges from preferential trade arrangements to free trade areas. This is the loosest form of economic integration.1 Theoretical Exposition of Economic Union: The theory of economic integration refers to the commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together. 3. 1.6 Economic Union: An economic union goes still further by harmonizing or even unifying the monetary and fiscal policies of member states. and in addition it harmonizes trade policies (such as the setting of common tariffs rates) toward the rest of the world.5 Monetary Union: Monetary union involves scrapping individual currencies. 3.3 Customs Union: In customs union no tariff or other barriers on trade among members (as in a free trade area).4 Common Market : Common market goes beyond a customs union by also allowing the free movement of labour and capital among member nations. such as the Euro. This means that there is a common exchange rate . 3. 37 . The EU achieved the status of a common market at the beginning of 1993.1.1. and adopting a single.1. such as the European Central Bank.1. and a single central bank. a common monetary policy. 3. 3. shared currency. The ultimate economic purpose of integration is an acceleration of growth in the partner countries.3. The formation of an Economic Union has two effects on international trade. This is the most advanced type of economic integration.7 The supra-national union or Political Union: Where the respective governments abandon completely their sovereignty over the policies stated above and a supranational authority issues binding decisions. including interest rates and the regulation of the quantity of money. trade creation is good. This market-determined economic relationship between India and Europe changed with the advent of British colonialism in sub-continent. This pattern continued for few years.cost union members. Indian leadership adapted a policy of “Self reliance”. Slowly India became centre place of European trading activities in Asia and put the foundation of new trade era through the Indian Ocean by the Portuguese. 3. It has been established that as a result of these interactions. In general.2 Historical Background of India and European Union: The trade relationship between India and Europe is running for a long period. Trade Diversion: A shift in the pattern of trade from low cost world producers to higher. Dutch. As independent India established its relations with other countries’ trade that was diversified1. a major portion of Indian trade was either with Britain or its colonies and allies. At the end of the fifteenth century. French and English East India companies. From a world welfare point of view. 2. the Indian economy expanded further and was integrated with the pre-modern global economy. At the time of independence in 1947. The appeals of the six countries to Britain in 1951 and 1956 failed to evoke any response and India remained quite unconcerned. The creation of the European Economic Community in 1958 did not have much significance for India. trade diversion is viewed as welfare reducing for the world. India adopted a policy of non-alignment and 38 . After independence. During the cold war period.1. European traders came to India and began exporting goods from India to Europe and also other parts of Asia. Trade Creation: Trade creation will occur when there is a reduction in tariff barriers which lead to an increase in consumer surplus and economic economic welfare. C. The main objective of this new agreement were:(1) developing commercial relations and intensified economic cooperation. KB Lall presents credentials to the European Commission’s first President Walter Hallstein in 1962.E. As a result.(2) give a new dimension to the mutual relationship between India EC(3) strengthening economic relationship based on mutual cooperation and comparative advantage (4) pursuing economic cooperation in an evolutionary and pragmatic manner(5) augmenting 39 .E. its interactions with Europe became limited. to the E.2 India’s first Ambassador H. India’s traditional trading partner. in 1973.maintained a close relationship with the former Soviet Union. India and EEC signed commercial cooperation Agreement (CCA) followed by a five year commercial economic cooperation agreement (CECA) in 1981. The relationship between the EU as a block and the republic of India really took root in their present from in 1963. the European Union) These relations become closer with the accession of the U. when India was amongst the first developing countries to establish diplomatic relations with the then six-nation European economic community (Subsequently the European community and since 1992.K. on the recommendation of (HLTG) both parties initiate negotiation for a bilateral trade and investment agreement. intellectual and material resources. 40 . A high level trade groups was setup to suggest the ways to make the relationship more intense. At the 7th summit in 2006 held at Helsinki. At the six summit held in 2005. In 1993 India and European businessmen launched a joint initiative. European community Investment partner’s scheme is launched in 1991 in India to provide financing facility to promote EU-India joint ventures among small and medium sized enterprise.3 In 1983. Here a decision was taken to hold annual summits. is generally considered to be a water shed in the evaluation of strong economical. India and EU agreed to forge a “Strategic partnership” to enable the partners to better address complex international issues in the context of globalization 4. Following the agreement negotiations for an EU India (FTA) free Trade Agreement were launched on June 2007 in Brussels. The fifth summit in 2004 which took place at Hague. the joint business forum. The completion of FTA remains a strategic objective for both sides. The signing of the FTA has been delayed as differences have cropped up between India and EU over certain issues which would be kept off the agreement. The first India EU summit which took place in Lisbon in June 2000. capital of India and in 1985 signed a Commercial and Economic Co-operation Agreement. political and technological ties between India and EU. both parties adopted the joint action plan (JAP) for the strategic partnership and agreed to enhance bilateral trade and economic relations and remove barriers inhibiting trade and investment.international economic cooperation commensurate with human. European commission established a delegation in New Delhi. automobiles. France. EU initiative towards a free trade agreement (FTA) with India is a key component of its “Global Europe” policy framework based on several long-term economic and strategic goals. The precursor to the European Union was established after World War II. India accounts for 2.2% of the EU’s imports. Italy and Belgium. Many reputed European companies are investing in India in diverse areas such as energy. financial services pharmaceutical and retail. Germany. the Netherlands. India ranked 8 th in the list of the EU’s main trading partners in 2010.The EU as a bloc is India’s largest trading and investment partner. The bilateral trade constitutes a quarter of India’s total trade and EU is also India’s biggest partner in development cooperation and second largest source of foreign direct investment. information technology. 41 . The EU is accounted for 19% of India’s total exports and 14% of India’s total imports in 2010.6% of EU’s total exports and 2. The necessity of some type of European integration in a new way to reorder the European political map became evident. therefore leaders are also expected to review progress during the summit. civil aviation. The EU has been the biggest investor in India with a cumulative volume of 20 billion Euros since 2000. ports. On the other hand. 3. up from 15th in 2002. Several rounds of consultation have been held until now. The key EU member states for FDI are UK.3 History before the formation of Union: The history of Europe was one of a series of wars and conflicts. and efforts are made to unite the countries of Europe to end the period of wars between neighbouring countries. Many people considered it as the first step towards European integration in the 42 . pronounced a speech at Zurich University (Switzerland) on September19. the Second World War had put a definitive end to the traditional European hegemony in the world. “I wish to speak to you today about the tragedy of Europe. or as much of it as we can. had a very superior economic. 1946. The first step in the recreation of the European family must be a partnership between France and Germany". The two new super powers. it was a question of searching an accommodation between France and Germany. the USA and the Soviet Union. felt that another war should be avoided at any cost. the extended desire among many Europeans to create a freer. political and military might than the heterogeneous group of European states. The European integration will paved the way to guarantee peace. What is this sovereign remedy? It is to recreate the European family. if it were generally and spontaneously adopted by the great majority of people in many lands. and to provide it with a structure under which it can dwell in peace. like Jean Monnet. Winston Churchill. Secondly. would as if by a miracle transform the whole scene. fairer and more prosperous continent in which the international relationship were developed in a framework of concord. Thirdly. We must build a kind of United States of Europe. Three different realities evinced the necessity of this new orientation towards the European integration. or the greater part of it. in safety and in freedom.Great thinkers. Yet all the while there is a remedy which. and would in a few years make all Europe. Firstly. as free and as happy as Switzerland is today. the two world wars had begun as European civil wars and this continent had been the main battle field in both.5 Former British Prime Minister. Essentially. met at Messina (Italy) on 1 June. the organization for European economic cooperation (OEEC) was established. In 1948. He gave the bright idea to place the entire France and German in production of coal and steel under a Common High Authority and thereby the European Coal and Steel Community (ECSC) came into existence in 1952. He was the first president of the UN General Assembly.e. the Benelux (Customs union between Belgium. when the France parliament vetoed its application. The failure of the EDC had demonstrated that political and military union was still an utopian objective. 1955 under the chairmanship of Paul Henri Spaak of Belgian. This project was aborted in 1954.post war period. they reached there 43 . That same year the France Government proposed the establishment of an European Defense Community (EDC).e. coal and steel. In 1948.. The setting up of the council of Europe in 1949 meant another major step forward. Jean Monnet became the first president of this high authority. This was one of the first institutions that involved a great part of western European countries. But the thinkers like Jean moment did not keep quiet. The foreign ministers of the six countries. the Netherlands and Luxemburg) had started working by introducing a common external tariff. The first step in the process of foundation of the European Community was given by the French Foreign minister. The council tried to incite political cooperation among European Countries6. It helped to liberalise the trade among the member states and enhanced economic cooperation. The ECSC made remarkable strides in two years with the abolition of all restrictions on trade in coal and steel among six countries. The father of the United Europe i. The agreement. The view of Jean Monnet inspired the thought of Schuman who proposed an idea that it is an advisable to neutralize the bone of contention between Germany and France i. Robert Schuman. closer union among the people of Europe”. progressive abolition of restrictions on international trade by means of a common commercial policy.meant a definitive step in the European construction. The treaty of Rome is divided into six parts covering principles. and general and final provisions. 1957. and the intention was to confirm the solidarity which bound Europe and the overseas countries and the desire to 44 .4 The Rome Treaty: The treaty of Rome was signed on 25. creating the European Economic Community and allowing people and products to make throughout Europe. institutions of the community. 3. It is concluded for an unlimited period of time and contains 248 articles. They came into being on 1 st January. 3. The 25th March. 1958 after due ratification by the parliament of the member countries. 1958. annexure and declarations of intentions. policies of the community. differences and the backwardness existing between the various regions will be reduced to ensure their harmonious development. steady expansion balanced trade and fair competition would be guaranteed. constant improvement of the living and working conditions of their people. foundations of the community the association of overseas countries and territories.1 Preamble of the Treaty: Intention of the six signatory countries is “Determined to lay the foundations of an ever. the six countries signed the treaties of establishing the European Economic Community (EEC) and the European Atomic Energy Community (Euro tom). protocols. March 1957 and it came into force with effect from 1 January. It was resolved to ensure the economic and social progress of their countries by common action eliminating the barriers.4. Objectives of the agricultural policy are the regional development of agricultural production and the optimum utilization of factor of production. List C consists of semi finished goods for which the maximum tariff is 10%. 45 . Items for which duties are to be negotiated is mentioned in list G of article 20. particularly labour. The duties under the common external tariff were based on arithmetical average of tariff rates in member states on 1st January. would the substituted for the actual duties applied. List B deals to mainly raw materials for which the common customs tariff may not exceed more than 3%. The detail of this arithmetical average. Article 19 deals with the common custom tariff. List E mention about organic chemicals for which tariff may not exceed 25%. imposition of import and export duties or charges of equivalent effect between member states are probhited. List A duties. is mentioned from list A to list G.ensure the development of their prosperity in accordance with the principles of the charter of the united nation resolved to strengthen peace and liberty by pooling their resources and calling upon the other people of Europe who share their ideal to join in their efforts. The free exchange of goods within the community would apply not only to the goods produced in the member states but also to those which have been imported by a member state from outside the community on which customs duties have already been paid. Article 9 and 10 mention that the community is based upon a custom union in which all quantitative restrictions would be abolished. 1957. Agriculture is also an important aspect of the Rome treaty and is mentioned in the article 30 of the treaty. Goods on which tariff have been fixed by mutual agreement is mention in list F. List D consists of tariff headings in respect of which duty under the common tariff may not exceed 15%. The Benelux countries were treated as a single unit. The individual import quotas of the overseas territories were converted into global quota for the benefit of all those member states with whom the territory in question was not specially connected. apply to all other member states any concession applying to the country with which it was specially connected. Any European country can apply for membership of the community is an important feature of the Rome treaty. Part IV of the Rome treaty deals with the Association of overseas countries and territories.Article 91 deals. 103 to 116 with the Economic policy of the community. The basic principle of the association is that the product of the overseas territories would enter the community on equal terms with those of member states and each territory. 108 with if a member is threatened with serious balance of payment difficulties. Articles 129 and 130 dealt with the European investment Bank. to the extent possible. with dumping. 46 . 100 to 102 with the approximation of laws. bbcnews.com Father’s of the European Union 47 .(This map is not to the scale) Source: Map downloaded from www. 1963 Robert Schuman (French Foreign Minister) The architect of the European integration project Jean Monnet 1888 .1979 The unifying force behind the birth of the European Union 48 .1886 . 487.528 France Paris Founder 65.300 504.200 674.100 70.591.390 Spain Madrid 1 Jan 1986 46.4 Netherlands Amsterdam Founder 16.500 131.161.021 Germany Berlin Denmark Copenhagen 1 Jan 1973 5.704.602.543 Founder[d] 80.730.779.633.523.990 Portugal Lisbon 1 Jan 1986 10.600 43.062.843 Italy Rome Founder 59.273 United Kingdom London 1 Jan 1973 63.300 92.600 30.100 243.700 357.200 301.600 41.586.030 49 .Schuman Declaration 9th May 1950 Information on EU member countries Accessio n Populatio n Name Capital Area (km) Belgium Brussels Founder 11.610 Greece Athens 1 Jan 1981 11.685.338 Luxembourg Luxembour g Founder 537.000 2.075 Ireland Dublin 1 Jan 1973 4. 400 316 Poland Warsaw 1 May 2004 38.451.855 Finland Helsinki 1 Jan 1995 5.1 Assembly (European Parliament): Article137 to 144 of the Rome treaty deals with the EU parliament.023.908.600 110.Name Capital Accessio n Populatio n Area (km) Austria Vienna 1 Jan 1995 8.900 9.035 Slovenia Ljubljana 1 May 2004 2.324.971.866 Estonia Tallinn 1 May 2004 1. 3.030 Latvia Riga 1 May 2004 2.533.555.800 64. The Tindemans report in 1976 strongly 50 .964 Cyprus Nicosia 1 May 2004 865.594 Source: European Commission Services 3.800 93.4.100 56.500 238. The EU is run not by one institution but by a series of institutions with their own remit mentioned in Article 4 of part one of the Rome treaty.516.227 Hungary Budapest 1 May 2004 9.300 312.284.200 Malta Valletta 1 May 2004 421.057.251 Czech Republic Prague 1 May 2004 10.900 449.262.424 Sweden Stockholm 1 Jan 1995 9.800 45.900 83.685 Slovakia Bratislava 1 May 2004 5. Initially members of the parliament were designated by the respective parliaments from among themselves in accordance with the procedure laid down by each member states.273 Bulgaria Sofia 1 Jan 2007 7.994 Romania Bucharest 1 Jan 2007 20.900 65.589 Lithuania Vilnius 1 May 2004 2.100 78.800 49.426.800 20.058.391 Croatia Zagreb 1 Jul 2013 4.700 338.4 Institutions of the Community: The European Union is supranational in character and a unique entity in the world.410. The latest election took place in June 2009. 51 . In Brussels each EU member states has a permanent team that represents and defends its national interest at EU level. It is based in Strasburg. Up to four times a year the president/prime ministers of the member states together with the president of European commission. It has also the right to give or withhold its assent on the accession of new member states. 3. As a rule. The European parliament is directly elected by the citizens of the EU. Other ministers from member states may have an input in topics relevant to their expertise. ranging from 99 for Germany to 5 for Malta.recommended direct election of the parliament. meet as the European Council. the council only acts on a proposal from the commission. It has the theoretical power to approve or reject the nomination of commissioners and the power to censure the commission as whole if 2/3 of MEPs vote for this. The more populated member states have been allocated higher numbers of seats. members of it are known as members of European parliament (MEP) and they are elected by voters within a member state. The parliament can reject the annual budget of the EUP.2 The Council: This is the EU’s most powerful and main decision making body. The direct election to the EU parliament has now become a reality. but now with a centralised currency. The work of the council is prepared by the committee of the permanent representatives of the member states (COREPER). this would bring to a halt and bring the whole concept of a Europe working together in disrepute.4. conclusion of international agreements and the association of third countries. The current parliament has 736 members from all 27 countries and they are elected for 5 years. The foreign ministers of the member states generally constitute the council. 3.4.2.1 Qualified Majority Voting : Before 1986, just one country represented in the council could veto a policy but in 1986 QMV was introduced. This is a system whereby each country has been given a block of votes dependent on its size Germany, France, Italy and UK as the largest member have 29 votes each. Malta has 3 votes. In total, there are 345 votes and 255 are needed to secure a majority. In some sensitive areas such as taxation, asylum, common foreign and security policy, enlarge membership of the union council decisions have to be unanimous. 3.4.2.2 President Trios : When the council was established, it’s work was minimal and the presidency rotated between each of the then six members every six months. However as the work load of the council grew and the membership is increased, the lack of co-ordination between each successive six month presidency hindered the development of long-term priorities for the EU. The presidency is not a single president but rather the task is undertaken by a national government. Three successive presidencies, known as presidency trios, cooperate to provide additional continuity by sharing common political programmes. This was implemented in 2007 and formally laid down in the EU treaties in 2009 via the treaty of Lisbon.” 3.4.3 The European Commission: The European commission is the highest executive body of the EU. The commission is comprised of 27(yet to be 28) members each member state therefore nominates one member. A new commission is appointed every five years, within six months of the elections to the European parliament. Jose, Manuel Durao Barroso heads the EU executive as president of the European 52 commission since February 2010. The commission staff is divided into various departments known as Directorates General. The commission is important in the sense that it alone has the powers to initiate proposal and can revise it’s own proposals. Hundreds of proposals are submitted by the commission to the council every year. As the executive body of the EU, commission is responsible for the management and implementation of the EU budget and various funds like European Agricultural guidance and guarantee fund, regional development fund etc. It also negotiates treaties with other countries and participates in the meetings of the international organizations. It also insures that member states implement the community decisions. Commission can drags both the member states, individuals or companies to the court of justice if any decision of the commission or the treaty provisions are infringed after giving due opportunity to explain. It’s head office is in Brussels. 3.4.4 The court of Justice : The European court of Justice is consists of 27 Judges appointed by the member states, the members are appointed for a renewable period of six years. The function of the court is to apply the laws and direction that come from the commission. It also tasked with providing unambiguous interpretations of the provisions of the treaties, with aim of preventing all the members from interpreting EU law differently. The court can also hear cases against member states and the commission itself. The number of judges in a given case depends on the importance and impact of the case. It is located at Luxembourg. Since 2004, there has been a specialised tribunal that only handles disputed between the EU and its staff the European Union Civil Services Tribunal (Belgian Press Con.). 53 3.4.5. The European Court of Auditors : The establishment of the European Court of Auditors was laid down in the treaty of Brussels back in 1975, although it has become an institution by itself in the treaty of European Union. It is given the important task of monitoring the financial management of the European Union. It submits reports which form the basis of the parliament debates. The numbers of members is equal to the number of community members i.e. 27,one per member. It is located at Luxembourg. The term of its members are six years, they elect a president from amongst for three years. In addition to these institutions the EU has a number of other bodies which play a vital role in functioning of EU e.g. Economic and Social Committee that represents civil society, the European Investment Bank that finances EU investment projects and European Central Bank, which is responsible for EU monetary policy.7 54 India Map (Political) Source: Survey of India. Major shifts in economic policy were typically initiated with significant changes and then followed by a period of gradual adjustments. 55 .in) 3.5 Brief Political Economic History of India: A review of India’s economic and trade policies over the last 60 years reveals a pattern of conceptual economic theory moderated by pragmatic political and economic considerations. (www.surveyofindia.gov. ” which in effect opened up new trade opportunities for goods considered crucial to economic growth and development. shifting focus away from “rapid industrialization” over to a program of “self sustained growth. For the Third Five Year Plan (1961-66). The agricultural sector was a key focus of the First Five Year Plan. Prime Minister Nehru and the INC made an adjustment in its economic policies.6% for the First Five Year Plan. Successive Indian governments. and restrictions on the transport of agricultural crops. India’s trade policy shifted from “import substitution” to “efficient substitution of imports. food price controls. This adjusted 56 . Labour laws provided workers with protection from managerial misconduct. Real GDP grew at an average annual rate of 3.” At the same time. with the implementation of various subsidy programes. but also significantly reduced labour mobility. Monopolies were granted to state enterprises in a number of industries considered of economic or strategic importance.5% for the Second Five Year Plan. import substitution.Following its independence in 1947. Foreign direct investment was also severely restricted both by industry and size. Agricultural production rose 44% and manufacturing output increased 144%. the economic policies were also leading to growing merchandise trade and current account deficits that were depleting India’s foreign reserves. Private companies in other industries were often subject to licensing requirements and legally constrained in their size of operation. still headed by Prime Minister Nehru. Both exports and imports were controlled by licenses and tariffs. and relatively high levels of government participation in economic production.56 and 1956-61) with moderately successful results. and 2. However. remained relatively true to these policies for both its First and Second Five Year Plans (1951. the government of Prime Minister Jawaharlal Nehru of the Indian National Congress Party (INC) adopted an economic policy emphasizing rapid industrialization. replenish the nation’s international reserves. In response. toward the end of the decade. the combined effects of rise in oil prices (precipitated by Operation Desert Storm in the Persian Gulf) and the demise of the Soviet Union. and railway transport. by dismantling its interest rate controls. Some analysts attributed the economic slowdown to a failure of the federal government to continue and to complete the economic reforms initiated 57 . Fourth. the number of sectors reserved solely for the public sector were reduced from 18 industries to just three — military aircraft and warships. These reforms were overseen by his finance minister. led to a rapid devaluation of the rupee. However. India liberalized international trade by reducing import tariffs. efforts were made to reduce India’s perpetual fiscal deficits at both the federal and state levels. reducing government regulations and permitting greater competition. India liberalized its financial markets. nuclear energy generation. India’s real GDP growth rate accelerated from around 3-4% per year in the 1980s to 5-7% during the early 1990s. Third. a depletion of India’s international reserves. During the political tumult of 1990 and 1991. a major trading partner and a key source of foreign aid. Second. Manmohan Singh. Dr. India’s economic growth began to slow. and stimulate economic growth. First.economic policy remained in effect until the end of the Seventh Five Year Plan in 1990. The initial round of reforms included several elements. India was struck by a number of political and economic shocks. Following the initial round of economic reforms. eliminating import restrictions. and opening up India to foreign direct investment. Prime Minister Rao made a major and controversial change in economic policies designed to restore faith in the rupee. In 1990 and 1991. and fears of an impending severe recession. The ensuing debate over the merits of the 1991 reforms contributed to a second period of gradual economic reform in the second half of the 1990s and into the current decade. 58 . 2. there was a rather elaborate system of licenses and regulations governing the establishment of a business in India. some analysts argue that many Indians are skeptical about economic reforms in general. 3. thus posing a “marketing” problem for the government in a democratic system. Other analysts argued that economic problems generated by the reforms were creating structural barriers to continued growth. A major reduction in average and peak tariff rates for imports. The elimination of the “License Raj” — prior to the reforms. The termination of state monopolies for all but three industries. A restructuring of many of the nation’s various subsidy programs. Since 1991. and 6. making it a very timely and expensive process to start a new concern.at the beginning of the decade. 5. Still. representatives of the Indian business community insist that all of New Delhi’s progress in economic reform has been voluntary and is not made under external pressure. 4. A reduction in domestic price controls for key consumer goods. The abolition of import licenses for most commodities. including: 1. However. and that the general path of liberalization will continue to be followed regardless of what party or coalition is in power. Some suggest that even segments of the private sector oppose reform efforts8. India has made a number of significant changes in the structure of its economy. 400 products faced quantitative restrictions. and eliminating import licensing requirements. tariffs provided one third of India’s gross tax revenue9 Over the last few years. India started a gradual process of transforming its import control mechanisms from quantitative restrictions to a tariff based system that favored the import of some types of products. In some cases. while India has been lowering its various import barriers. tariff rates were significantly raised when the import restrictions were lifted.3. Prior to the economic reforms of the 1990s. Following the passage of the 1995 amendment to its 1975 Customs Act. Between 1995 and 2001. The stated goal is to reduce tariffs towards levels found among Association of South East Asian Nations (ASEAN) members. reducing the variation in tariff rates.6 India’s Trade Policies: India’s trade policies have generally been coordinated with its overall economic policies. India utilised a fairly comprehensive import licensing system to control the import of goods. With the advent of the economic reforms. India has been simplifying its import policies by lowering tariffs. it has become a leading nation in the filing of antidumping measures with the WTO. A side effect of the change in trade policy was the rising importance of import tariffs for India’s federal budget.10 However. 59 . The import of a number of products was banned and over 1. which established India’s antidumping and countervailing duty procedures. but deterred the import of other types of products. In fiscal year 1996/97. India began filing a large number of antidumping notifications. India made 250 such notifications11. but by fiscal year 2001/2002. These duties generally involved the imposition of the higher of two tariffs — one calculated on a percentage basis.7 Tariff Rates and Enforcement: India’s tariff system has long had a reputation of being complex and opaque. Most of these perceived problems with India’s tariff system have improved with the lowering of its average tariff rate and the simplification of its tariff schedule. many products in HS chapters 50 to 63 still face this two-track duty system. According to the WTO. even among similar types of products. with a peak rate of 210%.12 Two product categories that remain exceptions to India’s tariff reduction and simplification are textiles and clothing. By 2005. the implicit tariff rate could be as high as 63%. India also had a more dispersed range of tariff rates. Moreover. the average rate had declined to 32.13 60 . In fiscal year 1991/92. depending on the unit price of the imported textile or garment. Besides having a comparatively high average tariff rate. India’s average tariff rate was down to 19. India’s average tariff rate was 35.5%. in fiscal year 1997/98.3. Prior to the elimination of import licenses for textile and clothing imports in April 2001. Finally. India had many exemptions or exceptions to the standard “most favored nation” (MFN) tariff rate. India’s average tariff rate was almost 130%.77 in fiscal year 2006/07. just before the start of its economic reforms. making it difficult for foreign companies to determine the correct tariff rate for their exports. with a peak rate of 260%. as well as claims of arbitrary evaluation of imported goods. India introduced specific duties for a range of fabrics and apparel.3%. the other calculated by a fixed amount per kilogram or square meter. there were frequent reports of uneven enforcement of existing tariff laws.3%. According to one estimate. 61 . 2002. 9 “Trade Policy Review .” Chapter II World Trade Organization. 7. 2006.Chandra Mohan. May 22. 62 .2002. 2005. 10.” Outlook (Delhi).India. p.” Outlook (Delhi). 2 G. January 21.” WTO Trade Policy Review Body. p. 2006.” WTO Trade Policy Review Body. Sundram Ibid.Jayanth.5 7 Treaty of Rome.1957.References 1 Gulshan Sachdeva “India and the European Union:Broadening Strategic Partnership Beyond Economic Linkages” Swage Publications. October 6. 5 G. May 22. 31. 2009. 12 “India & Bangladesh: Bilateral Trade. N.April. p. 31 10 Ibid. “Why Economic Reforms Are Unpopular. V. “Why is Reform Unpopular?. November 27. 4 Kavaljit Singh “India-EU Free Trade Agreement: Should India Open Up Banking Sector?”madhyam. 2006.” Hindu (Chennai). 25. 3 Commission of the European Union Committees. 11 “Semi-Annual Report under Article 16. p.2008. 8 Pranab Bardhan. p.India. December 2006.” The World Bank.4 of the Agreement . 2002. November 10. p.Sundaram “India and The European Union ”Allied Publishers Limited. 14 “2007 Trade Policy Agenda and 2006 Annual Report. “The AntiReform Mindset.” WTO Committee on Anti-Dumping Practices. 13 “Trade Policy Review . Ibid no 4.India. Martin.15 Michael F. 2007 63 . Alan Kronstadt “India-U. Economic and Trade Relations” August 31.S. K. Chapter-4 Analytical Framework of Bilateral Trade Relation In this section. In addition. India’s merchandise export recorded negative growth in 2001.49percent. Table 4.74 millions $ in 2000.1 show deficit in the balance of trade and it is has been increasing continuously. India’s merchandise global trade has increased to 791137. After 2004 growth rate was not smooth it has 64 .1 shows India’s trade in goods from 2000to 2012. We will analysis India’s global trade position. Before we discuss the trade relation with EU.21 millions $ from 95096. we look at the trade relationship between the EU and India. India’ growth rate in total trade was increasing and in 2004 it was highest at 37. 4.45million in 2000. we look to Foreign Direct Investment (FDI) flows and service sector.58 million. In 2000 India’s merchandise export was $ 44560.29 million and in 2012 it increased to $300400. but after that it was increasing regularly and remains positive except 2009 and 2012. India’s imports have also increased since 2000. It increased to $490736.37 percent.1 Trade Trends of India’s Merchandise Global Trade: In the post liberalization period India’s trade has increased many folds. The prime reason for this deficit is the high import bill of petroleum products. In 2012.65 million in 2012 from $50536. The table 4. Although India’s share in the world trade is still small yet it has improve over the years. In 2010 it rose to highest level at 40. 4 3 251136.14 78149.33 490736.49 20.5 467124.29 43826.56 -8692.47 -118632.53 40.19 312149.26 791137.7 488.2 114.41 300400.56 95096.1 Trade Trends of India’s Merchandise Global Trade value in US $ millions Perio d 2000 2001 2002 2003 2004 Export 44560.08 1 28. Table 4.4 37.71 -14306.28 61412. 252.3 6 178751.52 35.41 -27981.1 8 185295.72 52719.9 2 23.83 414786. 791.94 2005 2006 2007 2008 2009 2010 2011 2012 Growth % Import 50536.521 Source: Own calculations from Export Import Databank.11 111517.37 -46075.83 141991.45 51413.2 312.3 23.1 3 489319. DGFT.150 114131.4 3 149165.59 -3.29 21.3 32.2 252256.3 29.05 13.23 32.0 1 303696.9 183355.43 63842.5 7 190336.85 103090.74 -88521.65 20.32 -59321.88 -118401 488991.49 22.45 27.0 5 163132.48 1.2 Share of India in the World Total Trade Year 200 0 200 1 2002 200 3 200 4 2005 2006 200 8 201 0 2012 Total export 95.16 -7586.0 7 620905.68 -5. 620.7 Balance Total Growth % -5976.8 8 369769.some ups and down.1 414.74 19.7 3 185735.4 28.74 95240 0.5 8 -1. of India Table 4. 95.1 141.05 -109621. Govt.6 19.89 33.7 17.4 9 -1.76 24.2 32.3 1 288372.7 24.62 29. 195.3 4.82 Growth % 22.5 3 126414.55 83535. The reason of these ups and down was melt down in European Union and in the leading economies of the world.49 195053.10 30.2 1 .6 5 0.25 42.92 795283.1 9 305963.2 4 251654.0 1 4 3 1 1 5 1 3 5 Value US$billi 65 2007 9 1 . 5 1.4.1 billion in FY 2000 to US$ 791.9 2.China with 11.6 and India occupied 19th rank with 1.6 Source: Ministry of Commerce & Industry.82 0. Malaysia and Indonesia.11 1.6 3. Brazil. Germany -7.74 0.7 2.03 1. India’s share in global exports rose from 0.68% in 2000 to 1.05 1.0 2. among others . India’s total merchandise trade increased from US$ 95. 66 .India has overtaken Australia.4 7.7 2.1 8.03 billion in FY2012.3 3. Government of India and Export Import Databank.80 0.68 0.6 percent as is clear from the table 4. India’s exports cover a wide range of items Major commodities that have registered a significant growth in their share in global exports include: mineral products. textile and textile articles.1 percent share is worlds leading exporter followed by USA-8.3 Leading Merchandise Exporters in the World (FY-2012): Exporter China USA Germany Japan Netherlands France South Korea Russia Italy Hong Kong UK India Share in 11. India now ranks as 19th largest global exporter.on Export% 0.3. Table 4.6 1. chemicals and related products etc. Thailand.6% in 2012.99 1. Government of India and Export Import Databank.1 3. gems and jewellery.6 4. up from 32nd position in 2000 .86 0.6 Rank 1 2 3 4 5 6 7 8 9 10 11 19 Source: Ministry of Commerce & Industry. 67 . Australia.1% in 2000 to 3.5 2 Germany 6.2012) Country Share rank USA 14.9 4 China 4.1 3 France 4.4-Share of India in the World service Trade (FY. up from 25th position in 2000 . Government of India and Export Import Databank.6 1 UK 6.3% in 2012 .3 7 Spain 3.India now ranks as 6th largest global exporter.India way ahead of Thailand.8 10 Source: Ministry of Commerce & Industry.1 8 Netherlands 3. Malaysia and Indonesia in the service sector. India has emerged as a major global player in services exports. India’s share in global services exports rose from 1.3 6 Japan 3. Brazil. 68 .3 5 India 3.0 9 Hong Kong 2.Table 4. 69 . China has emerged as the main destination while the share of EU has declined.5. The EU has traditionally been India’s leading export destination but its share is falling.1.2 Top Ten Export Destination of India in 2012: Over the years there have been changes in India’s export and import destinations. India’s export market is now more diversified and it is a conscious decision of the government to diversify the export markets. The export and import destinations in 2012 are in given in Table 4. In the case of imports.Figure-1 Trade Trends of India’s Merchandise Global Trade 800000 700000 600000 500000 400000 Export Import 300000 Total Balance 200000 100000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -100000 -200000 4. 70 . 9.8 6. Percenta ge SN .8 Switzerland.2 Singapore.3 Arabia Switzerla 4 nd Singapore 2.1 2 8 Indonesia 9 Iraq 10 Hong kong 5 5. 2. 4 UAE.1 10.8 8 Kuwait 9 Qatar 10 Indonesia 3.3 12.2 9.6 2. 13.6 Hong kong. 8. Percenta ge 1 2 3 4 11.5 8.9 2.6 3.5 Indonesia.7 7.1 6 7 Iraq 3.2 5 1 2 3 4 EU UAE China USA 13.5 Top Ten trading partners of India.7 12.5 7.3 USA.9 7 Saudi 5.8 2. 7.2 5 4.Table 4. 2.5 Figure3-India’s Major Import Destination in 2012 71 2. 2. 2.8 1 2 3 4 EU UAE USA China 16.8 China. 5.8 6.5 Saudi Arabia.6 EU. Partner percenta ge SN Partner .3 2.3 2.1 Singapo re 6 Hong Kong 7 Saudi Arabia 8 Japan 9 Brazil 10 Indonesi a Figure-2 Top Ten trade destination of India in 2012 Iraq.9 5 6 EU China UAE Saudi Arabia Switzerla nd USA 4.2012 IMPORT EXPORT TOTAL SN Partner .5 .6 2. 7. 5.Qatar.3 Indonesia. 3.8 China. 2 Saudi Arabia.2 72 .7 Hong Kong.8 Figure 4 -Top Ten Export Destination of India in 2012: Brazil. 16.6 EU. 12.1 Switzerland.2 Saudi Arabia.8 UAE. 12. 4. 10. 2. 2. 5 UAE.3 Indonesia. 6. 11.1 Singapore.1 Iraq.9 China.9 Kuwait. 4.3 USA. 3. 2.9 EU.1 Japan. 3.7 USA. 6. 2. 6 per cent of total EU trade and is its 8th largest trading partner.18 per cent in export and 11.7 6.4 .5 17.8 percent in 1959-60 to 8. http://ec.5 12.2 India -EU Trade: The EU is India’s largest trading partner in goods and second largest trading partner in services (after the US).8 7.4.5 14. Data of table 4.7 6.9 7.8 14.0 11. The percentage share of India’s export to the community of total exports remained almost static at 7.6-Indo-EC Trade during (1959-69) (Value in RS million) Year India’s exports to EEC India’s total export Exports to EEC as % of total export India’s imports from EEC India’s total imports 1959-60 1960-61 1961-92 1962-63 1963-64 1964-65 1965-66 1966-67 492 494 507 465 606 565 469 887 6299 6324 6552 6781 7893 8132 6835 11528 7.8 7.htm) ) 4.62 in import in 2011).8 14. whereas India contributes to only around 2. It accounts for around one-fifth of India’s merchandise trade (17.9 7.1 percent in 196869.9 17.1 (Eurostat 2008.7 1911 1959 1912 1580 1410 1724 1793 2983 9608 11216 10901 11315 12229 13490 12104 20784 73 Imports from EEC as % of total imports 19.europa.2.9 6.6 shows that the exports remained more or less at the same level since the formation of the community till 1968-69.1 Trends of India’s Merchandise Trade with the EU since it’s formation to 1969: The trend in India’s trade with the community since its formation is more important and significant. Table 4.eu/trade/issues/bilateral/countries/india/index_en. 8 Source: Compiled from UN commodity Trade Statics and EEC Analytical tables The main reason of this static situation was that during this period Britain. Despite the increase in our exports to and imports from the EEC. India’s foreign trade over the period was quite erratic while trade with the community was steadily increasing as indicated in table 4. the U. deepen and diversify their commercial and economic relations to the full extent of their growing capacity to meet each other’s requirement on the basis of complementarity”. exports started looking up.7 that since 1973-74. and West Germany. and not the EEC.1 2561 2336 20076 18616 12. Functioning of the (CCA) had all along been reasonably satisfactory which is revealed from the table 4. Both sides felt the need to diversify.4 8. “In 1960-61.K. which was India’s principal trading partner till at the middle of the 19601. During the period of 1976-77 first times since the formation of the community Indian exports exceed the imports. A large amount of this trade was till with two countries. Since 1973-74. The U. India’s exports to the EC had been increasing satisfactorily. The Commercial Cooperation Agreement (CCA) was signed by India and EEC on 17th December 1973 and came into existence on 1st March 1973. Because of the Government effort and the commercial cooperation agreement.8 12.K.3. our share in the EEC’s exports and imports remained stagnant over the years.3 It was the first ever trade agreement by the EC with any other Asian developing country. India has been importing 74 .1967-68 1968-69 884 1108 11928 13563 7. Accounted for about 27% of total exports and 20% of total imports”2. West European countries accounted for about 37% of India’s total trade. 19 30. when this upward movement was arrested temporarily.8.9 27.5 26. This is shown in 4.0 18.8 19. The steady growth of India’s exports was uninterrupted except in 1977-78. TABLE-4.1 20.5 27. machinery (electrical and mechanical chemical and sophisticated instruments) etc.7 24. Since the conclusion of the CCA. as a move to strengthen it’s industrial base4.1 30. India’s exports and imports increasing reasonably well.Trend of Indo-EC Trade (1980-2000) value in million us$ Year EU’s export 1980 2298 change over Previous.8 21.EC trade 1969-1979 Year India’s exports to EEC India’s total export Exports to EEC as % of total export India’s imports from EEC India total imports 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 2748 2796 3036 4077 6089 6894 8209 13935 13900 15760 66820 14139 15352 16082 19708 25234 33041 38631 51432 53630 57260 64270 19. but its imports have surpassed its exports.6 24.1 25. 4.6 19.2 Trend in Indo-EC Trade (1980-2000) Table 4.5 26.6 20.7-Indo .7.2 18.3 18.2 2792 3187 4777 5764 7040 8390 10443 9650 15180 20820 21200 15823 16342 18245 18674 29253 44967 50179 50738 60260 68030 86880 Imports from EEC as % of total imports 17.8 24.0 25.4 Source: Compiled from UN commodity trade statistics and EEC Analytical Tables. year -2..0 .mainly capital goods.8 20... resulting in a chronic balance of trade deficit..2. year 5 EU’s import 1799 75 change over Previous. 80 5882 20.5 2761 15. Ministry of Commerce and Industry.nic.90 4180 28.52 1993 6229 18.55 9790 3.in After the expiry of the CCA.21 1998 9539 -6.43 1999 10344 8.60 12341.1 1989 7085 24.3 1988 5673 00 3256 18.0 1985 5560 20.80 8588 10. India and the EC decided to start fresh negotiations with a view arriving at a new agreement in the light of the experience gained till then. http/commerce.43 10020. of India.5 76 .0 2572 37.0 2395 -12.34 2000 13303 28.0 1984 4629 21.5 4877 2.64 1991 5219 -13.16 9465 10. known as commercial and Economic Cooperation Agreement (CECA).00 2.0 1986 5705 3.00 4557 4. India and the EC agreed to conclude a new agreement which was concluded on 23 June 1981.00 12.0 1987 5678 -0.0 1983 3823 -5 2196 -15.0 2672 -8.16 Source: Calculations based on DGFT Data Bank. Govt.0 2905 32. After prolonged negotiations.0 1982 3991 19.75 1992 5244 0.19 1997 10208 3.60 1994 7053 12.91 6913 18.74 1995 9943 40.4 1990 5997 -15.97 7794 12.74 1996 9895 4.3 4541 8.1981 3363 46 1880 4.. imports also grew remarkably by 284%. In order to capture the European market. The Table 4. exports grew 9.8 shows trend in Indo –EEC Trade (1980-2000).7 4.55 against the import growth of 21.6% in 1993. quality is the most important determinant rather than costcompetitiveness. In India.22% during the same period. Similarly Indian exports to the EEC were 1799 million US$ in 1980. The compound growth rate of India’s exports was 17.11% of EC’s external trade in 1992. which increased 5882 million US$ in 1993 and percentage change from 2% in 1980 to 20. India’s exports to the EC increased by 210% on the other hand. One plausible reason may be the in ability of the Indian exporter to conform to the European specifications and fast changing market-trends.9 Bilateral merchandise Trade between India and EU-27 (2000-2012) 77 . we often neglect quality aspect and tend to give greater importance to the price factor. The CCA of 1973 continued up to 1980.The new agreement extended the horizon and scope of it’s economic and commercial cooperation. The European community has a share about 30% of India’s export and import. Both way Indo-EC trade was no more than 1. During CECA.6 The percentage change in India’s import over the previous year which was 5% in 1980 rose to 18. Though CECA was much diversified than CCA but it’s performance on the external sector was quite lackluster during this period. One could easily observe that India has not been able to realize its economic potential for exports to the member of the EC.97% one interesting feature of this period was that export growth was higher than import growth.80 in 1993.54% at compound rate and imports growth was 7. India’s import from the EC at 2298 million US$ in 1980 had increased to 6229 million US$ in 1993. Between 1973 and 1980. 93 12.0746 14.71 19302.05 24720..25 -493.73 72985.3276 -10. Ministry of Commerce and Industry.67 billion in 2000 to US$ 44.05 20.7 billion in 2000 to about US$ 46 billion in 2010-11.1716 -5.46 -558.87 2003 14516.45 90579.17 2002 11886.98 82084.02 21.5 billion 2010-11.17 2001 10155.79 44539.50 22.38 18.37 21. http/commerce.1 2005 23228.3086 28.46 20.nic.62 109428 2012 16.7 11.Year Export % share % change Import % Share % Change BOT Total Trade with EU 2000 10694.24 16.7122 -.18 11. India’s trade with the EU-27 has increased in relative terms as a percentage of India’s total export and import.37 23.01 21.12 13.9 indicates that in recent years India’s total trade with combined EU-27 have increased from about US$ 21.21 17.69 2769.08 17.17 2010 46039.in As table 4.28 29591.5465 17.41 14.71 38450.47 2008 39351.06 37551.77 19.69 2007 34535.78 3914.9993 10.43 21.8989 20.36 billion in 2000 to about US$ 102.9) shows that although in absolute terms.41 22.95 42733.2371 13. of India.16 23.84 2009 36028.13 19.06 2405.1234 -4.0453 15.15 21369.43 20804.2790 28.79 56687. Govt.2898 17.1 102696p Source: Calculations based on DGFT Data Bank.2251 15.31 2011 17.8457 25.4291 34.51 29856.7380 22.29 25998.7 billion in 2012 out of which export to combined EU27 have increased from about US$ 10.04 1053.1554 -8.84 3024.3324 27.52 -948. it has declined 78 .64 10675.37 49227.5325 27.05 12834.13 15074. Data of above table (4.84 22.27 2004 18249.0711 11.1702 28.07 7446.04 10648 20.10 15.14 3381. Similarly Indian imports from the EU-27 have grown from about US$ 10.45 38433.45 21.89 1499.05 2006 26834. 16 19. However in 2012 it declined to its lowest level i.54 22.09 in 1980 it was 0.8 in 2000. during this period India’s trade with various other countries grow significantly.e.7 16. India’s export and 79 . For example India-US trade grows at an average rate of 26.07 15.35 percent of total import and 0. In comparison.3 Indian Share in EU’s merchandise trade: In 1957 India’s share in EEC’s total import was 0.74 21.62 11.71 20.17 22.24 21.12 20. This rising level of trade with other regions indicate that the European economies have not been able to take full advantage of an expanding economy8 Figure-1EU’s Share in Total Indian trade 30 25 20 15 10 23.31 17.33 17.9.99 23.7 percent and import 11.85 22.1 percent as shown in table 4. export 16.18 16.33 12.07 13.06 and in import was 1.53 21.29 18. share of EU-27 in export was about 24 % and in import was21.89 20.1 5 0 2000 2001 2002 2003 2004 2005 2006 Export 2007 2008 2009 2010 2011 2012 Import 4.3% and its trade with china registered a growth of nearly 53% per year.12%.17 21.05 11. As indicated in table 4.42 17.23 21.consistently in the last decade.28 14.48 of export.2. 9 1.import to the EEC are hardly one percent of total extra –EEC export and import in 1980. Ministry of Commerce and Industry.6 2.4 2.8 2 2.nic.1 2.6 1.4 1.in 80 .6 1. of India.4 2.10 Indian share in total EU trade (%) 1.5 1.5 1.7 1.6 1. 2002 2003 2004 2006 2007 2008 2009 2010 2011 2005 2001 Import Export year 2000 Table 4.9 2.6 1. http/commerce.3 Source: Calculations based on DGFT Data Bank.6 1.1 2.5 1.7 1. Govt.2 2.3 1.5 2. Tourism.6 percent in 1991 to 58. but since 2005-2011 trade was in the favour of EU. Over the years. Bilateral trade in services between India and the EU has increased from $7. In 2010. the share of agriculture and manufacturing in India’s GDP is declining while the share of services is rapidly increasing. India does not report bilateral trade in services data but Eurostat data shows that India has closed to one percent share in EU trade in services. India is also becoming a significant player in global trade in services. Financial services.6% in 2011 in export. which is lower than many Asian countries.3% in 2000 to 2.2 percent in 2012.6% in 2000 to 2. followed by the US (10 81 .9 billion in 2012 and the EU is India’s largest trading partner in services. Transport and communication services have been experiencing double-digit growth since 2002.6% of EU’s total exports and 2. As it can be seen from table 4. Since the 1999.3% in 2011 in import and 1. Although the share of India in EU’s total export and import is increased 1. trade in services almost increased five times.Share of the service sector in the GDP of Indian economy rises from 44. EU is the biggest global player in international trade in services.9billion in 2004 to $28.3% of the EU’s total imports in 2011. This growth is not satisfactory and indicates that India has not been able to take the full advantage of the enlargement of EU-27.11 between 2000-2012. 4. the rapidly expanding services sector has been giving more contribution to economic growth than any other sector.After post liberalization India-EU trade had shown impressive growth over the last years. the EU contributed 11 percent to India’s services trade. Data’s in table 4. balance was in the favour of India.11 shows that from 2000-2004.3 Trade in services between EU and India: There is no denying fact that services are assuming centre stage in the economies of both India and the European Union in recent years. However India accounts for 2. 8 -0.1 0.1 14.1 -0. Japan. In 2006 India was put in the 6 th rank.3 5.7 1.eu/portal/page/portal/-statistics/themes *EU’s exports are Indian import and EU’s import is Indian export.5 2.3 2.1 2. the UK remained India’s biggest market within the EU followed by Germany and France.1 2.6 -0.6 2.7 -0.8 4.5 5.7 9.5 9 8.per cent) 15.11-Bilateral Services Trade between India and EU Euro Billions EU’s export to India EU’s import from India Balance 2. behind EU-27. China and Canada.7 Source: http://epp.2 1. 82 .ec. As far as export of services is concerned.4 5.1 0.eurostat.4 1.2 3.7 7.1 14.2 1.3 7.8 10. the US.europa.5 10 8. year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Table4.7 3 -0.9 7.8 1.8 8.8 3 -0.6 8. there has not been much improvement in share of services trade in total trade for the EU.3 per cent and 21.8 in India and EU’s total trade.Trade in Services 16 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -2 EU’s export to India EU’s import from India Balance Figure-2 4.6 and 20. Contribution of service sector in 2000 was 27. Table also shows that while.3.2per cent in India and EU’s total trade.4 per cent. over time. which is higher than global share of 18. In 2011. services trade contributed 27. 83 .1 Importance of Services Trade in India and the EU: Services trade contributes a significant share in total trade (including merchandise and services trade) of India and the EU. share of trade in services in India’s total trade has increased. 5 34. 84 .5 36.6 28.5 22.9 29.6 21.4 22.9 22.5 21. Indian FDI equity inflow increased from 2. This indicates that foreign companies are investing in India to access key resources of host country and to enter into the bigger South Asian Countries market.1 27. The cumulative FDI inflows from all countries in India during this period from January 2001 to December 2012 were 188.6 27.6 27.8 19. FDI inflows from developing and transition economies reached record levels in the year 2007 contributing to their economic growth.4 20.9 26.2 35.789 million USD in December 2012.4.1 24 29. 2006.6 28.8 21.347 million USD in January 2000 to 22.9 20.8 27.15 .5 28.8 20.unctad.6 22. FDI plays vital role in the economic growth of a nation.org/ReportFolders/reportFolders.2 21.3 EU Export import Service trade 21.5 24.3 22.1 20. 2005.aspx 4.2 Source:http://unctadstat.6 20.3.6 21.2 35.4 Foreign Direct Investment (FDI) International capital movements.Per cent Share of Services Trade in Total Trade India and the EU year 2000 2001 2005 2008 2009 2010 2011 India Export import Service trade 28.4 33.8 25.8 23. According to UNCTAD’s World Investment Reports (2004.5 21.6 24. 2008).2.47 billion USD as shown in the table 4.8 21. especially cross-border direct investment inflows popularly known as foreign direct investment (FDI).1 23.2 30. According to Reserve Bank of India (RBI). 1 Foreign Direct Investment Inflows from EU to India: The EU is India's largest source of foreign direct investment with a stock of 34. transportation industries.1 0. the EU’s investment flows to India gained momentum and increase from about 2.8 0.2 3.The main sectors which attracted FDI from European Union were electrical equipments. or a fifth of that in Brazil 16.5 0.5 4. fuels.6 2.6 3.5 2.5 billion Euros in 2006 to about 4.5 1.6 Euro in 2007. In 2007.4 billion Euros and India's investments in Europe is also fast reaching 7 billion Euros.7 0.5 0. The UK has been a major attraction for Indian companies where more than 500 companies have invested.2 0.17 Table 4. "European FDI in India for instance is half the amount of that in China.3 3. The Netherlands and Cyprus have also received substantial Indian FDI.13-FDI flows between EU and India Euro billion Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Outflows From India to EU 0. India overtook China as the leading destination for FDI inflow from the EU in 2007. Indian FDI in the EU also increasing.8 1.4.6 0 0.4. chemicals and services.6 Source: Eurostat 85 Outflows From EU To India 0. or a quarter of that in Russia.However.1 0.1 3 .1 0. In fact.4 1. 86 .2 Country wise FDI inflow from European Union: The top most investing countries in India from 2001 to 2012 are given in table 4. the UK accounted for the highest FDI inflows followed by Netherlands.5 2 1.5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 inflow from india to EU out flow from EU to India 4.14.5 1 0. Germany and France.4.5 4 3. Among the EU member countries. Cyprus.5 3 2.Figure-3 5 4. 87 . based on data from the Reserve Bank of India. 88 2008 4 266 1 211 437 611 249 23 682 363 690 2009 4 120 1 623 283 602 40 804 125 643 2010 3 966 43 34 570 69 22 486 163 1 33 119 248 1 418 2 2 1 183 34 538 2011 7 241 20 40 1 568 23 15 589 368 1 152 89 3 1 301 10 2 4 251 43 2 760 2012 5 310 41 33 415 83 3 547 467 2 1 63 34 1 713 517 11 348 10 1 022 total 32294 104 107 6028 175 40 2809 3247 3 35 752 449 3 76836 527 15 6 1 1380 187 8741 .14 Country wise FDI inflow from European Union during 2001-2012 European Union Austria Belgium Cyprus Denmark Finland France Germany Greece Ireland Italy Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Spain Sweden United Kingdom 2001 303 88 74 28 68 45 2002 474 53 103 94 224 2003 457 34 69 197 157 2004 561 44 143 24 196 70 84 2005 450 13 12 45 39 50 30 261 2006 2 761 58 100 116 57 559 62 1 809 2007 2 385 570 136 486 21 15 601 48 508 Source: UNCTAD FDI/TNC database.Table4. 61 14.241 5.5 15.471 Growth Rate FDI Equity Inflow from EU Countries (million USD) 303 474 457 561 450 2.2 18.15 shows the FDI inflows from EU to India during 2001 to 2012.33 513.3 Total FDI Equity Inflow to India during 2001 to 2012: The FDI equity inflows from EU to India increased from303 million US$ in the year 2001 to 5310 million US$ in the year 2012.75 2005 35.57 56.0 11. Table 4.266 4.921 37. 78.32 -3.61 2008 133.3 17.096 27.1 22.51 -19.966 7.73 2011 64.120 15.5 10.17 -13.385 4.42 2010 -22.310 32.9 23.355 11.621 22.520 3.58 2004 54. FDI equity inflow from EU to India is approximately 24 percent during the period January 2001 to December 2012.9 20.1 2001 2002 -4.15 FDI Equity Inflows Year FDI Equity Inflow from world (million USD) 3.120 3.007 34.57 2012 -34.4.044 21.09 -3.0 17.78 2006 155.1 26.359 2. Ministry of Commerce and Industry.789 188.54 22.761 2.43 2003 -38.294 Growth Rate FDI Equity Inflow from EU as Percentage of Total FDI inflows (%) 8.1 -3.86 2009 -27.66 Cumulative Total Source: Department of Industrial Policy and Promotion (DIPP).4. 89 .079 3.55 2007 43.213 4.3 24.Table 4. Government of India.8 15.8 82. the EC’s total imports were 581 billion ECU which increased to 1255 billion ECU in 1994.4.9 Almost all member states have shown higher import growth over the years. Every other member state has much higher import growth rate. The compound growth rate of EC’S total import was 6. In 1981.4.16 we have shown that EU’s (extra) growth of imports from 2000-2012. In table 4.4 percent growth rate. For other member countries rates of growth of imports vary between 5 and 9 percent except Ireland whose performance is lackluster 1. During this period Slovak republic showed the highest growth rate of 16. Presently the EU’s contribution to India’s trade (both export and import) is about one third of the total.4 A Time Series analysis of India and European Union Trade Pattern The EU is India ’s largest trading partner followed by US and China.1 Trends of EU’s World Imports: Let us first see the growth scenario of the EC’s world imports. 4. Bulgaria and Latvia both has 14. The rate varies across from one member state to another.8 percent respectively.1 percent per annum. 90 . followed by Lithuania 16.0 percent and romania 15.09 percent from 1981to1994.0 percent. 3 14.3 12.5 13 12 9.wits.4 6.2 6.1 9 14.1 6.5 7. 91 2007 413036 611364 511823 22289 421368 1059308 97445 87045 679918 76099 78326 391237 156056 81576 152823 8749 116822 16665 94660 15185 24445 4947 164172 59208 29476 30085 69946 5474073 2008 466338 695004 560960 25498 494937 1204209 109166 84953 705344 89302 90106 418728 175026 92190 168982 10849 141834 17335 108785 15775 31295 5141 210479 72612 33986 37015 82965 6148814 2009 354586 540502 414784 18771 382190 938363 80364 62566 522042 67192 69985 287502 136418 60830 119949 7933 104850 11360 77272 9337 18341 4034 149570 55160 23902 23341 54256 4595400 2010 391256 599172 486984 20400 439987 1066817 83162 60550 627618 63942 75572 315547 150593 68767 148788 8645 125691 13197 87432 11143 23378 5732 174128 64382 26592 25360 62007 5226842 2011 466349 700852 558832 25972 492838 1260298 96437 67171 717606 60832 80324 362835 182350 83862 176945 4789 150813 18963 101370 15431 31801 7396 209192 76690 31237 32494 76365 6090044 2012 437883 663269 489104 24011 501134 1173288 92297 63100 689137 62341 72293 325835 169663 76089 162709 7377 139727 19750 94266 16082 32238 7896 191430 76859 28383 32743 70260 5719164 CAGR 7.TABLE 4.com.3 1.4 5.7 6.8 6.Trends of EU’s World Imports (Value in million US$.4 16 7.2 7 8 7.) Belgium France Italy Luxembourg Netherland Germany Denmark Ireland UK Greece Portugal Spain Austria Finland Sweden Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Slovak Republic Slovenia Bulgaria Romania EU-27 2000 176991 303758 238069 10592 198927 500830 44533 50649 374703 29487 39879 152898 68374 33886 72767 2001 178698 293866 236127 11188 195562 486022 44625 51376 358703 28434 39456 154993 70492 33268 63536 2002 198095 303831 246609 11529 194115 490450 49285 52214 NA 31299 40032 165920 72796 33440 67121 2003 234922 362517 297403 13646 233997 601761 56227 53782 425369 44855 47166 208549 91595 41572 84199 2004 286478 434242 355267 16772 284014 718150 66845 62345 502886 52810 68222 259265 111261 50658 100833 2005 319085 475857 384836 17586 310591 779819 72716 70284 528461 54894 61167 289611 119950 58473 111351 6382 76527 11018 65920 8770 15704 3865 101539 34226 19626 2006 353094 529902 442565 19640 358510 922213 84187 76621 614812 63739 66694 329976 134356 69427 127101 7046 93429 14641 76979 11427 19388 4396 125645 44759 23013 2472185 2435413 2174803 3065837 3717949 4056883 4687935 SOURCE: World Integrated Trade Solution (WITS) www.1 16.16.9 6.8 6.9 5.8 5.4 15 . has lower import growth rate then the average growth rate i.8 and Italy 11.6 percent during the same period.K.e. except France and The Netherland whose growth rate was 14. Table 4.8 percent to Slovak Republic for Estonia it was 23.6 percent. 92 . 14 percent during the same period. France and Spain had import growth between 6 to 7 percent. Germany 11.17 shows the time series trends of the EU’s imports from India. it was below average in case of Belgium11. India’s export to Estonia grew by 31 percent per annum and 25.If we judge India’s export performance by growth rate only. Rate of growth to Denmark 12.Table 4. Compared to smaller countries. The growth rate of these countries varies between 9 to 16 percent.6 percent.16 revealed an interesting phenomenon that the former communist countries or the east European countries like Slovak Republic. Top ten partners of India in European Union. Against the compound growth rate of 14 percent of India total export to the EU. the rate was highest in case of Estonia.4 percent and to U.2 percent during the same period. Lithuania. Latvia and Estonia shows the highest import growth rate per annum. to Spain 5. India’s export performance to the largest member states has been some rather what disappointing except The Netherland . On the other hand big countries like Germany.4 and 23 percent respectively. it was 11.6 percent. 24 103.7 132.9 11522 13890 17540 23120 26621 2007 4207.74 104. Hungary.2 2103.42 69.06 226.7 1680.8 374.81 45944 SOURCE: World Integrated Trade Solution (WITS) www.com * India’s export to European Union means union’s import from India.5 300.9 4.41 59.84 677.25 81.6 2519 10.67 264.4 14.85 116.14 1047. Malta. Estonia.wits.27 219. Latvia.13 528.3 200.34 7285 364.9 1729.4 148.41 36196 2010 5784.8 19.71 330.14 176.TABLE4.28 279. 93 2011 7160.15 143. Lithuania.81 2496.4 11.89 150.69 44.6 18.86 84.64 1604.7 132.67 135.6 106.87 13.46 2865.56 6348.01 194.6 1020 1308.2 690.58 880.22 59.02 108.3 4986 4372.8 12.3 564.3 4.8 306.76 192.27 2999.1 2544.08 518.2 20.22 810.8 3586.3 3584.1 1357.79 156.47 71.63 10411 9845.7 6388.82 314. ** Cyprus.77 5059.53 147.38 2160.12 170.6 14.88 1788.67 2474.6 174.2 490.9 106.7 162.58 317.41 96.69 326.48 316 96.45 35.7 183.1 410.63 46.08 5622.85 421.99 787 94.4 117.19 1289.5 14.68 47.5 19.62 271.31 226.27 686.8 2005 2871.9 2826.36 387.82 177.17 66. Slovenia and Bulgaria became members from 2004.1 9151.6 945 1206.09 1907.49 146.7 5249.9 670.2 707.15 54.45 121.66 28.12 810.86 102.11 71.8 4558.6 4551.71 366.4 452.3 3020.4 15.41 76.8 3400.76 28.69 250.8 5.6 18.16 2001 1390.7 666.5 530.24 88.8 1074.54 241.5 874.3 593.89 848.83 160.34 223.38 495.1 306.38 103.9 14 .85 107.7 113.2 2079.77 426.69 8612.29 386.76 7677.16 28.09 260.1 9.93 60.77 52.92 627.74 211.18 34.91 180.9 20.66 449.3 305.98 269.5 59.58 50.26 100.99 3681.69 262.74 208.3 746.78 6397.1 4883.41 239.5 583.18 2298.4 151.19 47.47 204.88 526.57 36.31 215.9 2106.13 35.51 380.92 2674.44 2538.3 5.33 69.96 21. Czech Republic.39 32.7 254.31 176.6 241.8 757.91 212.6 183.28 68.57 2029.34 825 56.46 119.6 8.57 6221.1 10.81 40.3 3819.88 323.36 476.39 102.4 91.92 269.61 60.27 2002 1661.73 43.47 863.77 6649.17 1389.55 39112 2009 3759.3 7942.43 440.9 25.8 328.5 496.2 10565 7246.63 230.91 2293.7 16.93 3023.1 9.6 11.2 14.47 6705.78 666.9 790.19 83.9 580.61 447.3 49.89 566.74 270.6 5412.42 260. *** Bulgaria and Romania became members from 2007.45 47.89 1605.39 33.4 11.31 439.01 183.6 3984.8 39.01 273.8 458.9 3824.9 2286 11.02 58.38 111.4 23.7 1280.3 341.1 2599.6 6751.75 154.99 1878.03 52713 2012 5507.08 147.99 251.7 33.6 11.18 134.1 5121.8 0.84 2565.2 23 11.5 4.43 398.39 708.88 2004 2509. Poland.06 525.57 314.26 8589. Slovak Republic.85 103.21 76.46 34443 2008 4480.6 31 21.7 73.6 2006 3478.4 5209.89 1002.89 498.6 3.6 3914 11.54 50408 CAGR 11.47 187.74 544.36 227.04 169.2 11.6 8.49 81.3 252.29 2003 1805.17:-Trend of India’s Export to the European Union (Value in US$ Million) Belgium France Italy Luxembourg Netherland Germany Denmark Ireland UK Greece Portugal Spain Austria Finland Sweden Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Slovak Rep Slovenia Bulgaria Romania EU-27 2000 1470. A part from high tariff.transparent barriers hurt more severely than tariff barriers.13 94 . Poland 19.6.45 percent in 2000. which increased to 088 percent in 2012. There may be several reasons as to why Indian share in the EU market has been always at a low level. demand side factors. and Germany 11.6 percent. Inspite of having several supply problems.17 shows that India’s share in the EU’s total import’s has been abnormally low over the years but has been improving later on. 10 The share of India has been increasing but remains below 1 percent during the same period.8 percent. it’ market is well-protect by a plethora of non tariff barriers.Import growth rate of the former communist countries like Estonia31percent. 11 All imports of textiles and garments have been under stringent quota restrictions since 196112.6. It’s share in EU’s total import was 0. Lithaunia23.Italy10. Non. are not less important. Trade distortionary effects of NTB’s are much more prominent than higher tariffs. Factual evidence shows that since mid seventies the EC has become more protectionist towards India especially in areas of labour intensive goods with less value addition.9 percent is higher than the western countries of the EU like Belgium 11. High tariff can be absorbed through efficient production but non tariff barriers are difficult to deal with them because in most of the cases they are non transparent. Table 4. 63 0.02 0.4.47 1.29 0.43 0.16 0.13 0.32 0.75 0.18 3.28 0.94 1.06 0.37 0.17 0.32 0.TABLE4.36 13.70 0.92 2010 1.22 0.40 0.83 0.40 2.88 0.31 0. India’s share was the lowest in case of Luxembourg.25 percent respectively during 2012.38 0.31 0.28 0.86 0.24 0.70 0.15 0.30 0.11 percent and to the UK it was 1.87 0.74 0.65 0.24 1.06 0.26 0.03 0. In 2012 only.38 *Table 4.26 0.34 0.73 0.14 0.81 0.35 0.44 0. and Czech Republic.31 0.18 is compiled from table 4.51 0.24 2008 2009 0.13 0.54 0.51 0.16 and 4.44 0.48 0.36 0.37 0.44 0. Table 4.01% 0.71 0.93 0.20 1.03.49 0.75 percent during the same period.10 0.11 0.34 0.28 0.06 0.55 0.26 2006 2007 0.30 0.18 0.82 0.84 0.37 0.19 percent of it’s total imports during the same period.55 0.73 0.58 0.23 0.35 0.14 0.24 0.25 0.47 0.10 0. Picture more or less same in case of Austria where India’s share was 0.42 0. India’ share in Belgium’s total import was 12.62 0.17 0.09 1.57 0.48 0.96 1.51 0.18-India’s share in EU’s Total Import Country wise (%) Year BELGIUM France ITALY LUXEMBOURG NETHERLAND GERMANY DENMARK DO IRELAND UK GREECE PORTUGAL SPAIN AUSTRIA FINLAND SWEDEN CYPRUS CZECHREPUBLIC ESTONIA HUNGARY LATIVA LITHUNIA MALTA POLAND SLOVAK REPUBLIC SLOVENIA BULGARIA ROMANIA 2000 0.61 0.07 0.96 0.14 0.41 0.35 0.03 1.59 0.17 0.36 0.16 0.98 0.26 0.11 0.58 0.61 0.70 0.55 0.18 gives detailed information of India’s share in EU’s import over the years both in average and individual states.57 0.45 1.12 0.03 0.39 0.68 0.83 0.05 0.46 5.56 0.83 0.77 0.81 0.39 0.42 0.34 0.39 0.12 0.33 0.It is also evident from the table that our export performance to some of the EU member countries has improved in recent 95 .19 0.59 0.43 0.05 0.18 0.55 0.11 0.07 0.02 0.53 0. Slovak Republic.42 0.40 0.54 0.11 0.06 2003 0.50 0.24 0. where India’s contribution was 5.11 0.28 0.48 0.13 0.19 0.25 0.03 2.65 0.48 0.19 0.67 0.43 0.19 0.20 0.19 0.00 0.47 0.15 0.51 0.99 1.48 0.44 0.63 0.45 0.34 0.44 0.14 0.02 0.19 0.08 0. 0.30 0.99 1.46 0.14 0.13 0.01 0.24 0.17 0.03 0.18 0.54 0.63 0.75 0.80 0.48 0.21 0.54 0.04 0.43 0.43 0.90 0.38 0.48 0.05 0.28 0.42 11.13 0.08 0.10 0.28 0.40 0.61 1.67 0.12 0.19 0.12 0. India’s share to The Netherland’s total import was 2.41 0.13 1.08 0.22 0.75 1.05 0.07 0.56 2012 1.24 0.36 0.20 0.19 0.36 0.39 0.09 0.71 0.76 0.26 0.27 0.00 0.57 0.10 2001 0.32 0.11 0.70 0.63 0.11 2004 0.28 0.43 0.07 0.17.29 0.22 0.17 0.13 0.34 0.18 percent respectively of their total import came from India.73 0.13 0.01 0.42 0.43 0.57 0.47 0.07 0. India’s share was highest in case of Malta.28 0.6 percent and with Italy it was 0.28 1.21 0.62 0.21 3.35 0.71 0.35 0.18 0.22 0.06 0.20 0.64 0.25 0.04 1.36 1.06 0.02 0.03 0.25 0.37 0.18 0.08 0.93 0.12 0.08 0.26 NA 0.39 0.39 0.58 0.61 0.09 0.87 0.54 0.55 0.01 0.91 0.15 2005 0.76 0.40 0.46 0.29 0.17 0.40 0.49 0.22 0.04 0.31 0.42 0.42 0.38 0.95 17.03 0.08 2002 0.38 0.82 0.81 0.13 0.72 0.25 0.08 0.89 0.57 0.77 0.47 0.53 2011 1.51 0.44 0.27 0.96 1.88 0.18 0.13 0.05 0.38 0.53 0.57 1.37 0.24 0.20 0.11 0.14 and 0.33 0.53 0.55 0.12 0.78 0.27 0.17 0.79 0.39 0.46 0.65 0.65 0. TABLE4.8 19.9 20.19 EU-27 Compound Annual Growth Rate of import (CAGR) World Belgium France Italy Luxembourg Netherland Germany Denmark Ireland UK Greece Portugal Spain Austria Finland Sweden Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Slovak Rep Slovenia Bulgaria Romania EU-27 Table4.2 14.0 7.7 6.4 5.3 12.3 5. which is reflected in India’s improved share in the countries market.6 11.17 India 7.6 8.4 11.1 6.years.3 14. India’s export performance to countries of EU was fluctuating.19 Based on table 4.4 15.8 0.2 11.6 3.4 16.1 9 14.1 10.9 25.2 23 11.5 13 12 9.8 5.0 na 96 11.5 19.8 12.1 16.2 7 8 7.16and4.4 15.9 4.4 23.8 6.3 1.6 31 21.2 20.8 6.9 5.4 11. From 2000 to 2012. but the long run effect shows that it has improved significantly.4 6.2 6.9 14 .9 6.6 18.5 7.5 14.6 14. This is the basic feature of India’s export pattern to the European Union in particular western countries in general 14. Sixteen major groups are as follows: 97 .added manufactured goods.For analytical purpose. A close look at the composition of her exports reveals that rather she has been exporting primary and labour intensive low value.3 Composition of Indian Export to the European Union: A Sectoral Analysis: Historical trends of the composition of the India’s export to the European Union shows that India has never been a very prominent exporter of hi-tech items. we have aggregated all sectors into 16 major groups.Figure-7 70 60 50 40 CAGR from india 30 CAGR from world 20 10 0 4. 98 . no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Sectors 1-5 06-15 16-24 25-26 27-27 28-38 39-40 41-43 44-49 50-63 64-67 68-71 72-83 84-85 86-89 90-99 Group Animal Vegetable Food Product Minerals Fuels Chemicals Plastic or Rubber Hides and Skin Wood Textile and Clothing Footwear Stone and Glass Metals Machine and Electronic Transportation miscellaneous 99 .Sr. 8 2.37 1.08 2.11 12.2 8 4.20 India’s Export to European Union 2000-2012 (Percentage Share of different Product Group) Year 2000 2001 2002 Animal 2.0 7 5.43 9.62 4.05 11.16 12.19 11.65 1.76 7.94 Footwear StoneGlas Source: Calculations based on DGFT Data Bank.64 Metals 13.93 1.22 1.8 8 4.57 1.73 0.28 16.04 1.3 2.56 3.19 Chemicals 8.35 3.6 9 3.95 1.35 4.05 12.52 3.7 3 10.5 1 3.59 8.11 9.7 12.4 1 3.TABLE4.17 7.38 8.65 1.03 1.0 8 5.55 0.57 4.84 Transport 12.63 1.22 6.14 2.16 6.53 1.52 1.8 8 2.1 11.8 1 3.98 2.72 1.24 6.98 4.8 0.53 2.43 0.49 31.51 4.13 1.09 Minerals 2.78 0.82 7.04 5.91 3.97 4.86 2.84 9.34 4.94 12.85 8.72 8.5 9 10.24 5. of India.73 8.02 8 9.39 3.38 3.68 0.7 5 4.55 3.65 3.98 2.19 9.6 0.22 3.61 0.86 19.74 1.26 27.58 3.78 10.51 1.71 5.89 6.5 4.54 12.34 3.53 6.01 13.nic.59 18.23 9.64 4.28 9.5 7 4.4 9 12.85 1.19 2.78 0. Ministry of Commerce and Industry.66 0.05 7.73 7.0 2 3.46 3.92 3.04 2.6 6 3.5 3 11.8 2 3.73 0.5 5.07 13.53 29.8 5 10.8 6.88 8.43 1.1 1 1.94 23.47 1.59 30.03 4.84 26.in 100 .4 4.5 5 6.45 1.51 9.09 4.44 0.5 8 3.68 7.3 3.58 0.53 5.32 1.1 6 5.46 3.64 1.52 1.79 1.1 Plast iRub 1.07 Miscellan 3.77 0.6 8 3.6 8 3.94 MachElec 10.76 1. Govt.39 1.53 Food Prod 1.7 2 4.2 8 5.23 4.33 6.73 3.4 14.2 2 10.05 2.52 9.24 27.89 11.9 2.41 1.78 6.59 3.7 8 2.04 3.92 Fuels 0.52 0.15 TextCloth 2004 2005 2006 2007 2008 2009 2010 2011 2012 2.04 8.31 3.09 0.23 1.6 0. http/commerce.72 20.6 7.7 8 3.82 3.95 31.68 Vegetable 8.84 8.3 6 8.47 12.77 3.41 23.29 3.73 Hides Skin Wood 7.92 1.34 9.55 9.18 0.49 200 3 2. 16 percent during 2000 to 8. The third reason behind such declining trend may be attributed to child labour issue. Similar to Hides Skin share of Vegetable Food products and Minerals has also declined during this period. This shows that it is one of the most potential items in Indo-EU trade. In 2012 the scenario is completely different Share of Textile and Clothing has been declining since 2000 and has declined to 16. Share of Hides and Skin has been declining since 2000 and had declined to 3.During 2000 textile has the highest share i. The rationale behind such declining trend may be the emergence of new competitors like Israel. Machine.16 percent. 31. Brazil etc.81percent during 2012.15 percent.82percent and Metals had the share of 5.02 and Hides and skin 7.53 percent of the total exports. Pakistan .2 percent was on the third place.e. Nearly one third of India’s to the EU market is composed of textile and clothing.78 percent in the export followed by stone and Glass products having a composite share of 13. During this period the share of two groups declined significantly are Stone and Glass and Hides and Skin.32 percent in 2000. Miracle is done by Fuel product during this period share of fuels has increased tremendously during this period. 101 .Bangladesh etc .24 percent during 2012.Secondly most of the quota free items are not of any interest to India. Export share of Stone Glass had declined from 13. Declining in share may be due to fierce competition arising from other textile exporting countries like China . Share of mach&Elect was 6.49 percent during 2012.44 percent during 2012. which increased to 13. Vegetable with a share of 8. Its share was 0. Other important categories in the export were chemicals8. In carpet sector Iran and China emerges as a new competitor from the developing countries. Share of Vegetable.Electronics goods. References 102 . The share of Mach&Elec has increased from 6.53% in 2000 to 7.Similarly the share of Transport items increased from 2.07 percent in 2012. Secondly EU frequently uses stringent sanitary and Phyto sanitary Standards (SPS) against its import of agricultural items from India. First is that the agricultural sectors is heavily protected by the subsidies given in “AMBER BOX*. Minerals and Animals products has declined during this period.08 percent during 2012. This simply because of two reasons. Metals and Transport items has shown significant improvement during this period.GREEN BOX**” and “BLUE BOX”***. The EU has been giving heavy subsidies to protect it’s farm sector from external competition.82 percent in 2000 to 12.52 percent in 2000 to 5. Export of Metals increased from 5.78 percent in 2012. Bhattacharya “India and European Union Trade and non-Traffic barriers” New Delhi 2005. red (forbidden).G.(Brussels).All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box. (New Delhi. 4 K. Wolfgang Ernst and H.S. be reduced). 2 Gulshan Sachdeva. 103 .In WTO terminology. takes in subsidies that do not distort trade. Lall. Amber .1973. 142 5 Commission of the European Committees. Blue box**:. Broadening Strategic Partnership Beyond Economic Linkages” Sage Publication (2008).B. 1 (AK Banerji – From mutual Indifference to co-operation EEC priorities and the evaluation of Indo-EEC economic relation) Allied publishers 1983-P-76). Blue and green boxes. TheseBoxes denote different kind of domestic subsidies provided in a country. amber (slow down — i. 3 Commission of the European Commission. subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted). “India and European Union. Green box***:. Amber box*:.K.It contains fully authorized aid. Chopra (eds) “India and the EEC”. 1 bid no.“Amber box with conditions” It includes aid that is linked to production limitation programmes and calculated to a fixed production data from an earlier period. The Agriculture Agreement has no red box. 4. “Indo-EC Trade under CCA” – in K. 6 S. 1984) P.e. The three boxes are. Ramanathan. Commercial Cooperation Agreement. 14S. “Quantifying Commercial Policies”.60. I.com/economic-survey/. Banga. spl.“IndianExportPerformance:AsectoralanalysisICRIER.104-43”.pp 135.ICRIER.(Cambridge University Press.K. and OECD Statistics on International Trade in Services by Partner Country (EBPOS 2002)’. oct. 12 Sam laird and Rene Vassenaar. 9 Commission of the European communities. of Rashmi India. Commercial Policy Measures And Shipping” McMillan Press. Issue on non tariff Barriers .Bhattacharya. in Applied Trade Policy Modelling. 13 Laired sam. “Eurostat”-several issues. P. (Brussels. “Contribution of Services to Output Growth and 104 . 11 Alexander J Yeats “Trade Barriers Facing Developed Countries.NewDelhi.Bhattacharya ibd. The cost of non-European Basicstudies : Executive summary.1990. Information Commercial Esponola. 29Aug 2008.1991. 15 The share is calculated from UNCTAD Statistics on International Trade:Services. 10 SK. ‘Economic Survey of India 2011-12’ Central Statistical Organisation. OECD Statistics.1979pp.Government http://exim.indiamart. Vol. 8 Business standard. 21). 1985).1995)pp1-45. 16 Central Statistical Organisation (CSO) (2012).7 Commission of the European communities.worki ngPaper” . Ministry of Statistics and Programme Implementation. and Bishwanath Goldar (2004). “why should we worried about non tariff measures”. Brussels 20 Kemekliene. Employment and Productivity. Education and Health and Safety (REHS).at/index. Heather. ICRIER Working Paper No.dipp. Maarten and Watt. European Trade Union Institute (ETUI) and Research. Austria http://indeunis.ac. 139. Gintare.wiiw. Investment and Collaboration in Services: India and European Union. Andrew (2007). Connolly. Chapter-5 105 . Brussels 21 " European Commission President Jose Manuel Durao Barroso said at a conference 'EU-India: A strategic relationship in an evolving world'organised by FICC. February. 19 Kemekleine. 17 S Havlik. 22 Government of India website: http/www.nic/fdi-statics/india—fdiindex. Gintare and Andrew Watt (2010).ICRIER. Peter (2006). Report 116.November. July 2004. Vienna Institute for International Economic Studies. Keune.Productivity in Indian Manufacturing: Pre and Post Reforms”.“Services Employment in the Europe: Now and in the Future”. “Economic restructuring in the new EU Member States and selected Newly Independent states: Effects on Growth.2012.php? action=content&id=publications 18 Arpita MukherjeeEnhancing Bilateral Trade.htm. “GATS and the EU” Impacts on Labour Markets and Regulatory Capacity”. European Trade Union Institute(ETUI). . 106 . In our study we intend to prove hypotheses on Indian and European Union Bilateral trade:  Contribution of the commodities in total export to European Union is decreasing in which India has higher comparative advantage. the comparative advantage shifts from the production of goods requiring the use of natural resources to those requiring a higher level of technology. In the fourth chapter. we have analyzed the growth scenario of Indian trade to European Union as a whole and also to its members In that section we have shown the direction of exports without showing there composition. Trade patterns are argued to be no longer determined by resource endowment and factor content of trade of respective countries. Rather they are dictated by trade policies.Shifting Paradigm of Trade Diversion It is expected that as a country progresses on the path of development. 1 Revealed Comparative Advantage (RCA) of India and European Union: In order to analyses the comparative advantage of Indian and EU exports in the world market.... This index measures the share of a commodity in the total exports of a given country. When RCA equals one... the lower the RCA below one.... we have calculated International Revealed Comparative Advantage (IRCA) for both India and EU by using the Balassa index.…(1) Where xij and xwj are the values of country i’s exports of product j and world’s exports of product j and where Xit and Xwt refer to the country’s total exports and world’s total exports... divided by the share of the same commodity in total world exports.. the country’s specialisation in a commodity is identical with the world specialisation in that commodity... The RCA of India and EU in each other’s market can be calculated as follows: India’sRCAin EU 107 . The Balassa Index is calculated as follows: RCAij=(xij/Xit)/(xwj/Xwt)……………………..5.. Likewise.. The higher the ratio is above one. the stronger is that economy's comparative advantage in a particular commodity. the weaker is that economy’s comparative advantage in that commodity.e...... This index will reflect the competitiveness of both countries in each other’s market in comparison to the rest of the world.. India and EU.. Based on similar logic.. we also propose to calculate RCA between two countries (RCA) i. It is a modified form of RCA looking at bi-lateral comparative advantage between countries. . indicating the continuous renewal of the with the degree of technological development a reversal takes place at higher levels 1 product cycle. leads to gain as well as loss for the country.(3) Where xijE= India’s export of commodity j to European Union... Selective Review of Literature: Several studies have been undertaken using the concept of revealed comparative advantage........(2) EU’sRCAinIndia(RCAEji)=(xEji/XEti)/(xwji/Xwti).......... Balassa’s results show that while the extent of export diversification tends to increase Li and Bender (2003) however argued that instead of complimenting or substituting exports. The evidence provided in the paper supports the available evidence on trade in research intensive products......... with the US maintaining its ever increasing technological lead... the change in comparative advantage of the country.. Balassa (1977) has undertaken an analysis of the pattern of comparative advantage of industrial countries for the period 1953 to 1971..... XitE= Total exports of India to European Union xwjE = World’s export of commodity j to European Union XwtE= Total exports of World to European Union xEji=EU’s export of commodity j to India XEti =Total exports of EU to India Xwji=world’s export of commodity j to India Xwti=Total exports of world to India...... Based on the standard deviation of the RCA indices for different countries an association is also seen to hold between size and diversification of exports................ A majority of these studies use data on export shares. They studied the RCA of manufacture exports over the period 1981-1999 of eight country groups incorporating 40 108 .(RCAijE)=(xijE/XitE)/(xwjE/XwtE)……….... By considering Balassa’s (1965) to measure performance of industry and commodities at HS 2digit and HS 6-digit level of thesecountries. Yue (2001) uses the RCA index to demonstrate the fact that China has changed its export pattern to coincide with its comparative advantage and that there are distinct differences in export patterns between the coastal regions and the interiors in China3. probably. Results indicate that Turkey’s accession to the EU market with no trade barriers may hamper the export position of the southern EU countries. and Spain. i. They also use the RCA index to examine if Turkey’s accession will jeopardize the trade for southern members. does not change the EU position significantly since country’s low trade volume with respect to the EU.6 Bhattacharyya (2011) investigated comparative advantage and competitiveness for horticultural products of India.5 Batra and Khan (2005) analyzed RCA at sector and product level.e. by employing RCA approach. It is pointed out that Turkey. The study sheds light on the changing structure of the Irish economy as indigenous industries lose their comparative advantage to high tech sectors driven byFDI4 Karakaya and Özgen (2002). Greece. This study made comparative analysis through RCA and structure changes across sectors in China and India for the period from 2000 to 2003. Results confirm that the export structures are remarkably different among Turkey and the EU. Smyth (2005) analyzed the change in Irelands RCA over the period 1997 to2002. This study compared the advantage in these commodities with major rivals of these commodities such as 109 . Portugal. investigate the potential trade creation and diversion effects of economic integration for Turkey and the EU.economies and put forth the view that a pattern of relative comparative advantage existed2. Stone and Glass3.74 in 2002 declined to 4. India is thus. The availability of a variety of raw materials has enabled the industry to produce a range of natural and artificial fibers. Textiles and clothing declined from 4. the prevalence of cheap labour and domestic availability of fabrics have enhanced India’s advantage vis-à-vis the rest of the world.Minerals 1.7 5. Thus. Hides and Skin which was 6.06.39.North American.54. China is fast overtaking India and hence domestic policies need to be spruced up if India has to compete with China (Prasad and Chandra 2005). So also. a developing country like India with a rich tradition is bound to enjoy a comparative advantage. one observes that India enjoyed comparative advantage in the exports of 9 out of the total 16 Sections in 2002 (Table5.07to 1. in the year 2005and 2011. footwear 4.27 to 3. Textiles. the figure went up marginally to 10.59in 2012.49 respectively. However. one of the best candidates for a thriving textile industry since the sector requires only semi and unskilled labour to mass produce many of its items. Asian and European Union markets. 110 .5 to . This Study concluded that India had a comparative advantage in fruits and vegetable sectors. Hides and Skin.71 to 3. has been India’s largest export earners since time-immemorial.1)however.2 India’s Revealed Comparative Advantage in Exports in EU Market: At the most aggregated level of the Sections. The RCA Index of all sectors except Plastic or Rubber declined continuously during the study period. Textiles and Clothing and Footwear enjoyed the maximum comparative advantage in the year2002. 111 . Chemical and Metals sectors RCA remains almost constant during the period of the study. Continuous decrease in RCA index of sectors like textiles. Stone and Glass and Hides and Skin is really a matter of inspection. Only Plastic and Rubber has increased its RCA from .and2009 every year RCA of EU was greater than 1 in 11 sectors out 16 sectors .74 to 1. Except three years2003. India is gradually gaining advantage in food products. fuels.2005.EU’S Revealed comparative Advantage in Export in India’s Market: In 2002 total 11 sectors had RCA greater than 1 out of 16 sectors.3. 5. It is clear from the observation of the table 5.2.If both the countries had greater than 1 RCA in the same sector it means inter industry trade is possible between the two countries. Machine and Electronics but RCA index is less than one.14 during the period.In the Animal. 36 1.34 0.05 3.50 1.41 0.39 0.com.22 0.16 3.43 1.05 6.33 0.47 Chemical food products Footwear Fuels hides & skin Mach&Elec Metals Minerals Miscellaneous Plastic or Rubber Stone and Glass Textile and Clothing Transportation Vegetable Wood number of section with RCA>1 1.61 0.61 0.27 2011 1.33 9 1.33 9 1.58 0.92 0.31 0.in TABLE5.67 0.44 1.25 4.38 0.44 3.06 0.34 0.82 0.64 0.TABLE 5.74 3.37 1.48 0.03 0.14 0.2 0.92 1.71 0.73 0.12 3.27 9 1.55 0.4 0.59 0.08 3.35 1.99 0.82 3.50 0.92 0.54 4.09 3.90 3.33 9 1.35 2009 1.29 0.nic.37 4.44 3. of India.17 0. http/commerce.52 4.41 3.66 3.13 1.63 0.16 1.33 2010 1.44 0.46 1.23 0.57 1.54 0.42 0.48 0.27 0.45 4. DGFT Data Bank.78 0.31 0.61 1.60 4.79 1.36 1.44 1.74 0.69 0.14 0.55 2003 1.33 9 Source: Calculations based on World Integrated Trade Solution (WITS) www. Govt.62 4.34 0.20 0.57 1.52 0.28 5.04 4.49 0.85 0.39 1.14 1.23 1.11 4.43 2008 1.2-EU’S Revealed comparative Advantage in Merchandise Export in India’s Market (Sector wise) 112 .9 0.38 0.45 1.71 0.98 0.268 10 1.3 8 1.47 4.37 1.61 1.03 0.66 3.49 0.1-India’s Revealed ComparativeAdvantage in Merchandise Export in EU’s Market (Sector wise) Sector Animal 2002 1.70 3.40 0.53 0.19 5.56 0.15 0.48 0.33 0.43 0.31 0.07 4.62 0.60 3.30 9 1.29 9 1.28 0.77 3.84 1.77 3.95 1.17 0.27 1. Ministry of Commerce and Industry.86 0.96 0.63 1.80 0.06 2.34 9 1.54 3.72 6.07 0.32 1.26 0.57 3.17 5.01 4.wits.57 2007 1.45 1.45 0.66 3.37 1.95 2.24 2012 1.62 3.70 0.45 1.43 2006 1.46 1.31 1.96 1.27 0.34 10 1.64 0.46 1.68 2004 1.45 0.55 1.25 0.43 1.33 4.12 5.5 0.45 2005 1. 16 2.77 1.09 0.65 1.nic.23 2.06 1. Govt.60 1.56 1.59 1.55 0.06 1.92 0.62 1.78 2.63 11 Source: Calculations based on World Integrated Trade Solution (WITS) www.91 0.85 0.71 0.33 1.53 1.09 2.02 1.09 1.92 1.84 1.62 0.01 0.17 2.15 2.52 0.02 0.78 0.91 1.07 1.75 2.70 2.18 0. DGFT Data Bank.25 1.41 1.22 0.in 113 .14 2.70 1.78 1.07 1.94 2.81 1.60 1.46 1.01 0.07 1.26 2.83 11 2.89 9 2010 0.com.19 1.78 1.22 1.69 2.17 0.19 0.61 1.67 0.01 0.06 1.73 2.70 2.011 0.57 1.02 2.45 1.22 1. of India.06 0.30 0.73 0.79 0.57 11 1.wits.18 2003 2004 2005 2006 2007 2008 2009 1.15 1.77 0. http/commerce.40 0.01 1.74 1.90 0.55 1.58 1.28 1.96 0.81 0.06 0.94 1.47 2.Sector ANIMAL CHEMICAL FOODPRODUCTS FOOTWEAR FUELS HIDES & SKIN MACH&ELEC METALS MINERALS MISCELLANEOUS PLASTIC OR RUBBER STONE AND GLASS TEXTILE AND CLOTHING TRANSPORTATION VEGETABLE WOOD Number Of Section With RCA>1 2002 0.13 0.66 2.86 2.75 0.00 0.182 1.60 1.08 0.10 0.81 0.11 1.50 1.24 2.47 1.03 0.99 1.49 1.78 1.56 0.58 2.57 2.23 1.85 1.30 0.10 0.07 1.40 1.85 1.14 2011 2012 2.42 1.44 0.46 1.49 1.25 2.02 0.33 0.30 0.51 1.47 1.01 2.35 1.34 1.69 11 1.30 11 1.02 0.67 1.32 10 1.86 2.62 1.07 1.02 2.063 4.99 0.41 1.25 1.016 1.07 1.18 2.967 1.01 0. Ministry of Commerce and Industry.39 11 2.32 1.74 0.92 1.15 1.68 1.62 1.03 11 10 1.01 0.82 1.94 1.83 0.15 11 1.08 0.99 1.13 0.43 1.21 0.88 0.55 1.68 0.61 1.59 1.43 0.17 1.13 0. At a slightly disaggregated level of chapters, India displayed RCA in 45 chapters, out of the total 98 in 2002. By 2006,about 49, chapters enjoyed comparative advantage. But after 2006 chapters enjoyed comparative advantagedecreased to 42 in 2010. But after that there in 2012 chapters enjoyed comparative advantage increased to 48. In fact, out of these, it is primarily 40 chapters, which have maintained comparative advantage throughout the period of study. A look at the table 5.3 suggests that during study period from 2002-2012out of 98 chapters 19 chapters shows decreasing comparative advantage , out of these 19 chapters 3 chapters RCAI decreased below 1 percent. Chapter NO.8 RCAI was 1.37 % in 2002 decreased to 0.9% in 2012, similarly C-46, and C-60has 1.55 and 2.44 RCAI in 2002 respectively decreased to 0.7 and 0.24 in 2012. A look at the table 5.3 shows that During study period C-57 displayed highest comparative advantage ie.19.43 percent followed by C-50 and C-53 ie.18.18 and12.84 percent respectively in 2002.After 2006 RCAI of C-57 decreased continuously from 20.58 to 12.85 percent in 2012 and same trend is displayed by C-50 and C-53, RCAI in C-50 and C53 decreased from 18.18percent and 12.84 percent in 2002 to 5.44 and 8.66 percent in 2012 respectively. Nine chapters out of 99 chapters shows increasing RCAI. Out of these 9 chapters six chapters i.e. C-11,C-30,C-38,C-56,C-87 and C99had their RCAI less than 1% in 2002, but during the study period all these sectors improve their situation and RCAI of these sectors reached above 1% in 2012. 114 TABLE 5.3-India’s Revealed Comparative Advantage (at 2 digits) in Merchandise Export in EU’s Market 115 co de CHAPTER 1 Live animals. 2 Meat and edible meat offal. 3 Fish and crustaceans, molluscs and other aquatic invertabrates. Dairy produce; birds' eggs; natural honey; edible prod. Of animal origin, not elsewhere spec. Or included. Products of animal origin, not elsewhere specified or included. Live trees and other plants; bulbs; roots and the like; cut flowers and ornamental foliage. Edible vegetables and certain roots and tubers. 4 5 6 7 8 Edible fruit and nuts; peel or citrus fruit or melons. 9 Coffee, tea, mate and spices. 1 0 Cereals. 1 1 Products of the milling industry; malt; starches; inulin; wheat gluten. Oil seeds and olea. Fruits; misc. Grains, seeds and fruit; industrial or medicinal plants; straw and fodder. Lac; gums, resins and other vegetable saps and extracts. 1 2 1 3 20 20 20 20 20 20 200 200 200 0 0 0 0 1 2011 1 6 8 9 3 4 5 7 0 2 0.0 0.0 0. 0.0 0. 0.0 0.0 0.0 0.00 0.00 0 0 0 0 0 0 00 00 1.07 12 361 0 5 0 0 0 4 43 24 03 9 9 6 5 7 1 9 0.0 0. 0.0 0.0 4.5 0 N 0 0 N N 00 NA 5.80 1.67 4 1 A 0 0 A A 11 3 3 9 2.3 1.9 1. 1.9 1. 1.9 2.1 1.78 1.79 1.71 2.1 0 7 9 5 6 8 45 53 06 437 3 6 2 9 4 5 7 41 8 52 8 5 6 9 8 7 3 200 2 0.6 21 86 0.9 1.2 0 6 5 4 9 3 1. 0 9 4 1.2 53 62 0.9 0.86 0.69 5 33 65 5 9 29 4 0. 0.2 0.14 4 5 896 8 4 1 9 4 1.5 51 38 1.7 1.6 1 3 9 3 7 4 1. 6 2 5 2.2 97 85 1.7 1.83 1.71 6 83 90 7 7 79 9 1. 1.4 1.12 5 2 881 0 0 6 7 1 0.8 0.9 0.9 9 1 68 9 5 1 7 0. 9 5 1 0.9 60 41 0.9 0.80 0.62 0 62 80 4 2 71 1 0. 0.6 6 0.56 4 1 851 3 7 4 1.1 2 0 9 1.1 1.0 1.3 1 5 72 4 3 02 1 1 4.0 3.9 4.5 2 7 79 8 5 88 7 4 3.4 2.9 3.2 1 5 58 5 7 65 8 7 0.9 0.6 0.8 2 83 5 9 59 7 9 1. 2 6 8 1. 2 8 3 3. 3 0 4 3. 8 9 9 1. 7 2 5 0.7 1.2 9 4 4 8 1 7 1. 0 9 5 1.0 58 65 0.8 1.02 0.88 4 55 54 4 6 92 7 0. 0.76 0.7 7 644 6 8 9 2 1 7.5 116 7. 6 5 8 4 5 9 8.3 89 36 7.3 6.23 6.03 2 22 53 8 5 85 9 8. 11. 7.69 3 0 717 5 4 4 6 3 1.2 1.1 94 9 17 0.8 23 05 8.1 8.6 50 0 18 1 1.2 90 94 1.2 55 76 3.6 56 47 4.2 96 99 1.5 65 35 0.9 2 6 1 0.9 3 6 5 3.0 1 8 5 2.1 7 5 3 1.4 0 7 8 1.18 1.16 90 04 6 15 0.89 0.88 00 97 7 38 2.76 2.23 09 45 1 21 2.63 4.06 76 38 7 66 1.75 2.24 82 41 7 65 1. 1.25 2 986 6 4 0. 0.73 7 632 9 9 1 2. 2.37 1 007 7 9 9 3. 1.99 4 154 4 4 8 2. 1.50 2 942 5 1.3 4 5 7 0.9 0 3 5 2.6 2 1 7 3.3 7 1 4 1.6 9 6 8 It increased to 62 sectors in 2008.4: India’s Top 20 Export Commodities To European Union: The RCA analysis of India’s top 20 export commodities group(at two digit level) to EU shows that Natural or Cultured Pearls. Organic Chemicals (HS-29). The strange fact about (HS-27) is that in 2002. When both the Economies have comparative advantage in same sector it means inter industry trade (IIT) is possible. During study period Indian export to EU changed their position some time HS-71 on second position HS-62 on third position and in another year HS-62 on first and HS-71 on second place similarly HS-84. HS29. In some sectors both the countries shows comparative Advantage. But after 2006 Mineral Fuels and Related products (HS-27) undisputedly remains on the first place. 5. 117 . Precious & semi precious Stones(HS-71) had been the topmost commodity group in the Indian export basket to EU till 2004.The second most important export group was Articles of Apparel and Clothing Accessories (HS-62) followed by (HS-61).In 2002 European Union has comparative advantage in 52 sectors out of 98 sectors as shown in Table no 1 of Appendix.HS-62.Articles of Leathers(HS-42).European Union has comparative advantage in more sectors than India.HS-61 changed their position year to year but remained in top 10. it was not even in top 20 commodities export by India to EU. Every year its comparative Advantage is increasing . After 2004 Mineral Fuels and Related products (HS-27) have become very prominent in India’s export to EU and take first place in 2007. 84 72 695.26 62 2.10 1.57 3 535.070.07 85 738.04 63 611.711.774.88 64 595.15 87 830.886.56 85 576.81 85 2.418.58 57 231.321.059.2 4 2012-2013 HSCode 2011-2012 HS Code 2010-2011 HS Code 2009-2010 HS Code 2008-2009 HSCode 2007-2008 HSCode 2006-2007 HSCode 2005-2006 HSCode 2004-2005 HSCode 2003-2004 HScode 2002-2003 HSCode SNO.380.245.145.34 62 3.02 87 572.59 84 2.95 62 2.44 3 304.173.14 431.32 72 1.3 7 39.44 463.85 72 252.45 57 304.250.8 42 1.421.26 39 833.22 87 2.03 99 405.15 73 1.311.86 73 1.231.326.690.18 30 1.033.01 87 2.617.69 27 2.02 63 1.816.3 8 52.40 524.222.632.845.094.87 39 572.70 71 1.45 63 847.8 4 26.070.56 87 1.624.77 62 2.20 84 1.23 85 1.83 3 749.77 61 1.45 71 1.98 73 325 73 486.79 27 2.03 64 1.359.473.225.82 71 2.44 85 569.345.122.75 87 248.209.32 30 404.28 29 2.47 30 976.12 85 1.49 73 1.9 64 1.028.649.58 72 1.396.50 73 805.14 42 816.0 5 46. TABLE 5.13 88 563.249.7 30 658.81 84 1.82 57 520.18 39 540.329.to ta l 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 11.68 71 3.78 39 465.75 64 698.59 30 1.8 72 1.406.177.151.29 52 628.74 61 2.544.407.516.29 9 636.08 84 2.82 40 626.35 85 2.495.93 84 743.0 2 23.178.23 85 2.421.179.654.255.75 27 4.66 42 796.253.52 42 1.814.6 39 941.89 27 6.09 87 2.3 3 400.06 9 244.98 29 1.51 57 495.01 72 2.65 85 1.81 3 350.99 29 860.057.95 73 579.091.822.95 39 377.84 64 1.079.64 61 1.02 42 1.61 27 8.41 42 1.28 39 361.228.088.83 71 4.2 42 704.9 29 1.62 61 2.206.61 71 3.94 61 2.21 52 465.96 71 2.089.31 62 3.243.79 3 511.718.91 29 1.66 63 856.58 85 3.36 73 1.64 63 761.712.73 52 554.700.911.47 27 810.937.10 1.72 38 487.03 72 1.2 64 788.430.31 29 2.1 9 224.264.18 30 949.446.54 30 213.25 61 2.6 9 838.478.179.205.44 64 1.443.17 88 454.5 29 1.11 570.44 30 265.74 62 3.88 62 1.17 27 7.242.19 62 1.39 73 730.850.44 61 1.6 52 447.58 88 638.71 87 705.42 29 2.41 52 420.08 84 369.67 42 1.65 88 723.98 3 749.4 1 14.52 39 646.005.397.72 30 829.91 61 2.016.94 72 783.321.077.556.96 62 2.2 3 287.27 84 998.42 72 2.13 62 2.07 442.73 72 1.27 63 792.88 84 1.165.404.22 87 2.14 73 235.52 63 898.74 71 62 61 29 42 64 52 85 63 1.535.53 57 463.4 5 34.38 84 1.42 64 1.13 9 772.42 71 3.40 61 2.296.23 42 979.503.878.822.02 30 356.38 63 894.98 3 499.93 89 752.39 84 1.24 42 637.141.78 71 2.831.74 57 442.04 29 2.351.India’s Top 20 Export commodities to EU-27 50.976.4.11 57 338.045.79 41 204.600.57 64 968.905.5 0 18.571.19 27 408.16 73 1.782.4 3 36.24 27 4.71 61 1.60 71 2.18 87 676.216.238.663.64 435.304.34 52 573.05 118 .225.22 27 9.039.17 39 917.005.39 29 722.85 63 1.688.36 84 557.89 30 451.003.984.60 64 1.53 87 2.33 63 958.853. Govt.wits.UNCOMTRADE and DGFT Data Bank.78 79 432.1 9 2 0 39 170.67 9 389.77 9 331.69 38 413.08 97 194.47 3 444.48 39 220. http/commerce.15 8 286.66 88 610.41 3 602. of India.04 9 252.com.92 89 433.33 32 499.27 32 166.22 38 617.nic. Ministry of Commerce and Industry.01 52 683.09 8 228.in 119 .72 9 483.1 Source: Own calculation based on World Integrated Trade Solution (WITS) www.52 32 420.58 9 461.03 40 635. Share of top 10 commodities in total export was 58.2RCA followed by Articles of apparel and clothing not knitted (HS-62) with a share of 9. IN 2205 (HS-71) the top most exported commodity to EU slashed to third position with a share of 8.26 percent in 2012.4 percent in 2002 increased to 62.6 RCA. Mineral fuels and product of their distillation (HS-27) took first place with 10.75 percent with 3. Precious & semi precious Stones(HS71) was on top with a share of 11.67 percent in total export. The share of top 10 commodities in total export was58.8percent and 3. 120 .44percent.83percent in 2002 to 18.(HS-99) miscellaneous goods was on 10th place .5. RCA of two commodities Electrical Machinery (HS-85) and (HS-99) out of the top ten is less than unity in 2002. 0.8 percent and (HS61) with 9 percent share in total export.But its RCA is less than unity i.e.5 RCA and Percentage in Total Export of Top 10 commodities export to EU: In 2002 Natural or Cultured Pearls.followed by HS-71.04 percent in 2002.The Product group of (HS27) has become the most important export item from India as it’s share increased .HS-62 and HS-29.25percent in 2012. It shows that India has become less competitive in this sector. Three commodities have their RCA value less than unity. 37 0.6 7 85 0.9 6 4.0 6 71 1. 4 4.1 85 0. of India. 1 3.6 3 3.4 4 72 2. 049 R C A 4.95 62 3.99 61 2. 75 % 2005 H S C 27 R C A 0.3 5 72 1.2 4 84 84 0.21 73 2.2 6 85 0.8 1 29 2.9 9 % 18. 8 3.9 9 73 2.6 5 87 0. 49 4.6 5 62 3. 75 3. 68 4. 6 6 64 7 R C A 0. 3 11. 2 3. 07 % 2011 H S C 27 60.77 72 2.4 2 85 0.7 2 4. 2 5. 69 3.7 6 3.7 1 29 1.2 8 9.9 4 2.5-RCA and Percentage in Total Export of Top 10 commodities export to EU 2002 RA NK. 3 6.0 3 61 29 2.wits.6 5 87 1. 9 3.1 3 87 N A 5.7 4 71 2. 74 3. 9 9 61 29 1.0 2 64 7. 4 5. 14 % 2008 H S C 27 55.1 5 87 1. 8 0. 49 4.1 7 29 2. 1 3 61 4 2003 % 2004 H S C 71 R C A 3.17 71 1. 62 4.TABLE5. 46 % 2006 H S C 27 11.1 7 63 R C A 0. 46 6. 9 0. 23 8. 77 % 2010 H S C 27 56.4 6 62 61 4.8 2 5.3 9 64 0.2 8 84 0.6 29 85 10 99 0. 33 7.1 5 87 0.8 6 4. 5 6.4 1 84 58.2 9 29 63 8. 2 10. 9 2. 37 7. 66 7. 62 4.8 62 3. 26 Source: Own calculation based on World Integrated Trade Solution (WITS) www. 18 7.8 5 85 R C A 0. 4 3. 51 6.4 6 6. 6 2. 79 4.9 4 71 1. 4 6. 59 4.4 5.8 27 61 4. 2 2 62 4.8 4 62 62 3.2 2 85 0. 49 5. 7 5. 2 3.47 85 0.3 61 3.4 3 4. 64 10.6 8 3.4 1 84 0.1 7 3. 44 4.7 4 85 0. 59 5. 04 18. 33 0. 91 3. 6 5.52 29 2.7 72 2.7 9 62 4. 82 0. 89 8. 44 17. 31 R C A 0.7 1 71 2.nic.8 3 42 R C A 0. 4 3. 67 8. 83 6. 6 5. 81 % 2007 H S C 62 56. 77 7.9 2 87 0. 18 3. 62 6.in 121 . 57 4. 79 3. 52 4. 1 H S C 71 R C A 3. 6 4.9 4 84 0.8 9 63 8.2 1 27 52 7.3 9 29 1. 03 5. 44 9. 52 0.8 7 61 3. 41 4.8 9 71 1. 69 5. 75 6. 24 3.7 8 64 3.0 4 4.1 2 84 0.com.7 8 6.8 5 71 29 2. 61 3.6 8 8.4 28 3.2 3 65.4 4 3. http/commerce.4 1 42 7.4 5 62 3.0 2 72 2. 48 % 2009 H S C 27 59. 91 5 3.3 05 3. 65 4.3 9 64 3.6 3.2 2 H S C 71 R C A 3. 05 3.9 6 61 61 3.0 2 72 2.1 4. 6 8. Ministry of Commerce and Industry.8 5 29 2.9 7 72 2. 17 4.8 8 62. 11 10. Govt. 24 5.0 7 42 6. 12 4. 48 6.8 3 61 2.8 6 64 6. 7 4. 79 6. 49 5. 6 2. 6 3. 31 10. 33 % 2012 65. 9 4. 76 3.7 1 71 3. 34 6.14 87 1.8 1 84 0. 2 7.UNCOMTRADE and DGFT Data Bank.1 8 85 0.4 4 84 63 8. 2 3. 57 H S C 27 R C A 0.0 4 29 2. 15 9. 25 62.9 1 62 3.8 9 87 2.6 7 4. 4 3. 87 4.9 9 42 63. 46 3.5 5 9 63 9. 25 6. 41 % 14. 84 7.89 84 0.6 1 64 4. 27 6. 3 3.7 9 5 42 8. 44 2.6 6 4. 82 4. 45 5.7 2 64 4.6 4 4. 4 6. 2.(HS-53)12. Non-Tariff Barriers According to UNCTAD definition that “non tariff barriers encompass all trade policy instruments that restrict free movement of goods and thus raise cost of production.HS-57(Carpets And Other Textile Floor Coverings) with the highest RCA 19.Out of ten commodities contribution of five commodities is less than one percent in total export.8.6 that in 2002 (HS-57) on the top with the highest RCA 19. Every year contribution of these commodities is decreasing and in 2012 it was only 08percentof total export.94 percent contribution and HS-50 (SILK) has just 0.In 2003 contribution of top ten RCA commodities is 15 percent.42)and(HS-13) with 8. But the strange factor about all the top ten commodities with highest RCA is that their contribution in total export to European Union was only 17 percent in 2002. Peter Lloyd defines NTBs as “non tariff barrier is an omnibus term for the set of government policy 122 .One of the main reason is Non Tariff Barriers introduced by the European Union.(HS-63)9.5.75 RCA.1RCA.2.6 Top ten commodities having highest RCA: If RCA of a particular commodity is greater than unity it means that country has comparative advantage in the production of that commodity. UNCTAD.Tenth place was occupied by the (HS-55) with 5. Fifth and sixth place was occupied by (HS.5 and 8.4 has 1.”(UNCTAD1988 “Consideration of the question of definition and methodology Employed in the UNCTAD Data base on Trade Measures”(TD/BAC/42/5)Geneva. There are many reasons of this declining in export of these commodities.7 percent in 2002.It is clear from the analysis of table 5.4 followed by (HS-50)18. Other requirements on production or post-production processes A8.Conformity assessment related to SPS B. UNCTAD has prepared an inventory of NTBs on the basis of information received from its member countries.Hygienic requirements A5-Treatment for elimination of plant and animal pests and disease-causing organisms in the final product (e. According to UNCTAD scheme.Tolerance limits for residues and restricted use of substances 123 . A-SANITARY AND PHYTOSANITARY MEASURES A1.g.Labelling.Prohibitions/restrictions of imports for SPS reasons A2. product specific non tariff measures are grouped into 16 broad categories (A to P) and each individual chapter is divided into groupings with depth up to three levels. any cost escalating measure apart from customs duties will be treated as non tariff barriers.Prohibitions/restrictions of imports for objectives set out in the TBT agreement B2.instrument and practices which operate directly to restrain imports or distort exports”. marking and packaging requirements A4. The UNCTAD classification scheme for non tariff trade control measures of a product specific nature is described below.TECHNICAL BARRIERS TO TRADE B1.Tolerance limits for residues and restricted use of substances A3. In a simple language we can say that. postharvest treatment) A6. Requirement to pass through specified port of customs C4.Non-automatic import-licensing procedures other than authorizations for SPS or TBT reasons 124 .Direct consignment requirement C3.Conformity assessment related to TBT C.Countervailing measure D3.B3 -Labelling.Product identity requirement B7.Safeguard measures E- NON-AUTOMATIC LICENSING.Product-quality or -performance requirement B8. PROHIBITIONS AND QUANTITY-CONTROL MEASURES OTHER THAN FOR SPS OR TBT REASONS E1.PRE-SHIPMENTINSPECTION AND OTHER FORMALITIES C1. QUOTAS.Antidumping measure D2. marking and packaging requirements B4 -Production or post-production requirements B6.Pre-shipment inspection C2.Import-monitoring and -surveillance requirements and other automatic licensing measures D -CONTINGENT TRADE-PROTECTIVE MEASURES D1. Regulations concerning terms of payment for imports H.Quotas E3.Additional taxes and charges levied in connection to services provided by the government F7.Prohibitions other than for SPS and TBT reasons E5.Tariff-rate quotas (TRQ) F-PRICE-CONTROL MEASURES.FINANCE MEASURES G1 -Advance payment requirement G2.Internal taxes and charges levied on imports F8 -Decreed customs valuations F9 -Price-control measures. G.Administrative measures affecting customs value F2.State-trading enterprises.Voluntary export-price restraints (VEPRs) F3. other selectiveimport channels H2. INCLUDING ADDITIONAL TAXES AND CHARGES F1.Measures affecting competitions 125 .Multiple exchange rates G3.E2.Regulation on official foreign exchange allocation G4.Variable charges F4 -Customs surcharges F5.MEASURES AFFECTING COMPETITION H1. for importing.Seasonal duties F6.Export-restraint arrangement E6.Compulsory use of national services H9. I.TRADE-RELATED INVESTMENT MEASURES I1.Local content measures I2-Trade-balancing measures I9 -Trade-related investment measures 126 . Export subsidies P8. for exporting. It is very difficult to identify the non-tariff barriers because these measures often lack transparency and are not covered under any trade rules (Papillon. Indian export products are subjected to multiple NTBs at a time in EU. echo labelling social clauses and anti dumping duties. Identification of EU's NTBs Affecting Indian Exports: Tariff rates are not very high in the EU but it protect its market through different types of NTB’s . 1994). the primary sector is five times more protected than the manufacturing sector.Measures on re-export P5.Export taxes and charges P6.DISTRIBUTION RESTRICTIONS J1 -Geographical restriction J2 -Restriction on resellers K -RESTRICTIONS ON POST-SALES SERVICES L -SUBSIDIES (excluding export subsidies under P7) M.Export measures. There are other forms of on tariff barriers are sprouting. These are. 127 . environmental clauses. In many cases.EXPORT-RELATED MEASURES P1-Export-license.GOVERNMENT PROCUREMENT RESTRICTIONS N -INTELLECTUAL PROPERTY O. -quota.Export price-control measures P4.Export credits P9. other selective exportChannels P3.RULES OF ORIGIN P. -prohibition and other quantitativeRestrictions P2-State-trading enterprises.Export technical measures P7.J.In EU. inspection and quarantine requirements Source: UNCTAD's TRAINS database.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Type of NTBs Antidumping investigations Antidumping duties Countervailing duties Retrospective Surveillance Prior surveillance Prior surveillance to protect human health Prior surveillance to protect Environment Non-automatic license Authorization to protect environment Authorization to protect wild life(CITES) Authorization to drug abuse Allocated quotas Quota to protect human health Quota to protect environment (Montreal protocol) Prohibition Prohibition on human health protection Prohibition on the basis of origin (Embargo) Technical requirement Product characteristics requirement for human health protection Product characteristics requirements to ensure human safety Labeling requirements Labeling requirements to protect human health Testing .List of NTBs imposed By European Union in 90s SI. 1990 128 . 7 8 42 0.8 6 58 5.3 HS C 9 9 57 13 9 8 .8 14 HS % C 1.3 10.1 5.8 5 63 3.2 9.94 8 42 5.5 0.0 6. 3 0.1 9. 2 63 7.1 5 63 3.3 4 42 5.7 19.8 5 57 0.3 4 50 0.6 2 4.57 7 53 0.8 2 50 3.55 9 63 3.7 2 HS C 57 2009 RC A % 9.2 6.9 2 0. 4 50 14 0. 7 52 7. 2 0.1 2 63 58 0. 4 50 11.1 8.2 5.4 4 0.1 8.4 7.2 1.2 3 53 11.1 5 68 0.32 1 55 7. 2 42 2.6 2 57 0.5 3 68 0 4.98 2 42 3. 8 55 4.53 5 14 1.2 2 2.7 0.07 2.1 5.4 8.0 5.0 8 63 5.33 7 10 2010 RC A 16.3 2 52 6.7 18.1 8 55 5.1 18.6 17.2 0.9 5.0 4 5.59 1 42 0.0 7 2.2 9 14 7.2 6.1 7 6.8 6.6 15 2004 RC A % HS C 1.42 8 13 13 3.1 7 2.97 2 14 0.23 2 9 2012 RC A HS C 57 13 11 % 2011 RC A HS C 1.1 9 63 5.1 8 13 6.1 1 58 4.6 4 57 0. 6 13 7.2 8.3 7 0.4 5 7.3 8.3 7.1 2 14 4.1 7 1.5 4 0.1 4 52 7.3 7.4 2 63 4.7 2.8 6 0.8 0. 9 68 5.4 7 0.41 2 14 0.59 2 58 8.6 6 0.6 4 58 4.0 6.72 2 7.3 6 0.1 1 0.4 9 57 0.8 20. 5 57 20 0.0 6.2 3 52 7.0 8 1.0 6 0.0 8 2.0 4 0.36 3 13 3.86 8 68 0.99 4 68 1.4 0.2 0.2 11 0.8 19.8 2 12.9 5.28 2 13 4.6 6 0.5 14.78 2 42 0.8 8.6 9.02 1.77 1 68 52 0.67 1 53 0.3 6 50 2.0 6.6 5.1 1 13 8.9 20.4 52 8.2 129 % 14.3 4 0.39 0.6 6.7 5.4 7 1.4 5 0.9 19.2 4 63 5.9 2 53 8.0 6.73 9 13 0.4 4 50 HS C 50 53 18.15 9 58 3.7 5 0.2 3 0.1 4 53 52 7.9 2 0 5.03 9 58 0.63 6 53 0.4 8.1 4 50 8.3 7.8 6.8 6.1 9.35 1 68 0.1 % 57 13.0 1 0.Table 5.57 7 52 % HS C 1.6 4 2.74 1 52 0. 9 0.7 0.41 4 42 0.3 4 2.6 1 2.5 4 2.3 14 2005 RC A 2008 RC A % 1.5 5 0.44 2 68 1.0 3 0.7 3 68 5.9 1 50 0.91 5 42 0.1 6.69 8 58 0.13 1 52 0.11 2 58 0.6 4 42 4.6 4 1. 2 53 9 1.1 8.5 4.2 5. 8 5.8 5.7 6 79 6 13 2006 RC A % HS C 1.5 5 50 5.6 3 55 4.7 0.7 7.6 1 4.7 53 63 42 13 52 14 68 55 0.1 5.4 4 0.3 2.6-Top 10 Commodities having highest RCA HS C 57 2002 RC A % 1.6 5 53 8.66 6 58 5.3 12.75 5 55 Total of % 17 2003 RC A % HS C 0.2 7.2 6.9 7 50 4.4 6.79 1 63 4.59 9 53 2007 RC A 2. of India. Ministry of Commerce and Industry. http/commerce.wits.Source: Own calculation based on World Integrated Trade Solution (WITS) www. Govt.com.in 130 .UNCOMTRADE and DGFT Data Bank.nic. The above table shows that RCA index is higher in Textile. (3) The majority of Indian export to European Union is facing tough competition from other Asian countries like China. 131 . commodities with the highest RCA are not very important or we can say that India is not exploiting the market of these commodities and has a great potential in these sectors.Green labelAZO dice etc. Carpets in all these sectors EU has high Tariff rates and Non tariff Barriers (NTB) e. Table 5. Silk.5 and 5. (4) India’s RCA is higher in Agricultural goods.6proves our Hypothesis that in total export to European Union contribution of those commodities is higher in which India had less Relative Comparative Advantage and the contribution of those commodities is decreasing in which India’s Relative Comparative Advantage is higher. Cotton.From the observation of table 5. Silk. Iran. The major conclusion emerged from this chapter are: (1) India’s RCA is higher in textile. (5) EU agricultural sector is heavily protected by subsidies given in “green box” and “blue box”. Pakistan. Indonesia etc. Readymade garments and some promising Agricultural goods and all these goods are low value added goods. Brazil.. Bangladesh.g.6 it is clear that in the export basket. RAGMARK. silk and in some Agricultural goods where EU does not have any natural advantage (2) The main Indian export to European Union are low value added manufactured goods. Textile and Garments. (6) EU frequently uses stringent sanitary and phytosanitary standards (SPS) against its import of agricultural items from India. 132 . “Economic Feasibility of Turkey’s Economic Integration with the EU:Perspectives from Trade Creation and Trade Diversion”. 133 .1. The Manchester School of Economic & Social Studies. Phuket. Ankara 6- Batra and Khan (2005). Working Paper (168). paper presented at the METU VI International Conference in Economics. Özgen (2002). E. No. 45. International Conference on Applied Economics – ICOAE 2011. (2011). Relative Advantage of Manufacture Exports Among World Regions: 1981-1999. Exchange Rate and Exports in China”. Dublin.101-114 5- Karakaya. 19531971”. Central Bank of Ireland. Ireland’s Revealed Comparative Advantage.B. APEC Study Center Consortium Annual Conference. Diarmaid Addison (2005). QuarterlyBulletin. 7- Bhattacharyya. pp. Revealed comparative advantage: an analysis for India and China. Thailand 3- Yue. pp. France 4- Smyth.paper prepared for the international conference on Chinese economy. September 11-14 2002. 1977. and F. R. Kui-Wai and Siegfried Bender. (2003). 327-44 2- Li. Changjun (2001) “Comparative Advantage. CERDI.References 1. Revealed Comparative Advantage and Competitiveness: A Case Study for India in Horticultural Products. issue 4. vol.Balassa. Indian Council for Research on International Economic Relations. Bela (1977) “'Revealed' Comparative Advantage Revisited: An Analysis of Relative Export shares of the Industrial Countries. After watching the European Union and economic benefits reaped through integration.Chapter-6 Findings and Recommendations 6. and India is no exception. the developing countries have also started thinking on the same line.1 Executive Summary : Of the three forms of international economic cooperation viz. investment and trade the last was considered the most beneficial because its advantage is speeding up the process of establishing new international economic order. Complementarity of the economies compels a developing economy to trade with other developed countries. Foreign trade plays an important role in the development of a country because foreign trade is considered as engine of growth. as it has significantly contributed to India’s economic advancement. Among its major trade partners European Union is selected for this study. aid. The overall objective of this study is to analyse the trade trend and the structure of India’s trade relations with the EU during the period 2000-2012. The Indo-EU trade relations are sought to be understood by observing the behavior of commodity groups in export and import. Some of the developing countries and also some developed countries have started aiming at integration or at least economic cooperation in the interest of overall 134 . Trade experience with European Union is both encouraging and instructive. India’s traditional trading partner to the EEC in 1973. Studies in this chapter show that the share of those commodities in total export is less and decreasing in which India has a comparative advantage. how a group of six countries develop itself into an Economic Union of 28 countries with a single currency (Euro) in seventeen countries. The fifth chapter basically analyses the effects of tariffs and non tariff barriers (NTB) on Indian export to EU. For this purpose in the study the researcher has used the Blassa’s Revealed Comparative Advantage (RCA) method. The review of literature has analysed the role of foreign trade in the development of a country.development of the region. trade in service and Foreign Direct Investment (FDI) between India and European Union. In this chapter the researcher has discussed in detail the merchandise trade. India is a traditional partner of Europe and trade relationship between both of them is running for a long period. Indo-EU trade has many dimensions and the spectrum of trade includes not only different composition of goods but also new areas of services and investment. These relations become closer with the accession of the UK. But the relationship between the EU as block and India really took place in when India was among the first developing countries to establish diplomatic relations with the then six nations of European Economic Community (EEC). studies on economic union and relations of India with the European Union. The fourth chapter analyses the bilateral trade relations between India and European Union. All these issues are taken up in detail in chapter III. In this chapter the researcher has discussed in detail the process of formation of European Union. Compounded Annual Growth Rate (CAGR) in percentage was estimated for value. 135 . However.2. In this context basically an analysis of trade advantages of India is discussed because as a developed economy European Union has more advantages in different sectors. EU’s single market has opened new vistas of Indo-EU economic relations. It will generate employment. In this context.The last chapter is Findings and Recommendations. Bilateral trade in services 136 . 6. the current size of trade and investment between the two countries is low compared to the size and structural complementarities of the two economies. both the economies have trade advantages in different sectors. The study shows that by removing and reducing some of the existing barriers bilateral trade and investment flows can be enhanced. Though both India and European Union have host of grey areas in their respective trade regime.1 Trade Advantage : (a) Service Sector : Services are the fastest growing sector of the Indian economy. the present research study analyses trade. service. reduce poverty and further strengthen the economic relationship between India and European Union. 6. while India’s exports mainly constitute low value-added and industrial products. The increase in merchandise trade between the two economies has been mainly because of the changing demand structures and comparative advantages of both economies in complementary sectors. It constitutes approximately 56% of Indian GDP.2 Findings of The Study : Bilateral economic relations between India and EU have strengthened over years. It is a unified market of 28 member states . investment relations and future areas of co-operation between India and EU. India has a large pool of young.between India and the EU has grown impressively . However. By removing the barriers trade can be increased many folds. The EU companies are facing a saturated market within their home countries. (b) Agriculture : Agricultural sector is an important part of the Indian economy. But EU’s agriculture sector is heavily subsidised and protected by NTB. - (c) Textile and Clothing : India has comparative advantage in the textiles but because of different types of NTB’s presently. India has comparative advantage in this sector.from $6. medical services and in business services. India has shown high growth in information technology. 137 .7 billion in 2009. Once these barriers removed India will be in better position to capture the EU market.7 billion in 2003 to $22. whereas the Indian market is growing. By entering into FTA with EU. educated and english-speaking work force who can offer services at globally competitive rates while the EU is facing a shortage of skilled work force as the population of the EU member countries is ageing. entire trade in textile and garments is guided by different type of non tariff barriers. this share is increasing. its share among EU’s trading partners in services is less than two per cent. This is not necessarily due to its great contribution to the GDP but more due to its significance for the rural population. Any tariff reduction in this sector have great impact on the Indian agricultural sector. The EU is India’s largest trading partner in services and accounts for around 13 per cent of India’s services trade. Although India is among the top 8 trading partners of the EU. India's export may increase. it is believed that pharmaceutical companies have been pressuring the EU to demand stricter rules on intellectual property protection. the cost of treatment fell significantly from 10. There are challenges/restrictions in reaching a consensus in trade goods. 6. services and investment.2 Restrictions in Economic Relations between India and European Union : There are several restrictions/barriers in the India–EU economic relations. But. The EU was hit by euro zone crisis and India has been facing high inflation and other imbalances.000 to 100 USD per person per year. 138 . because India does not always recognize patents.(d) Pharmaceutical Industries : Near about 80% of generic medicines for the treatment of AIDS are sourced from India. Any extension of the patent and trial data protection would significantly increase medicine spending. Both economies have been facing demand constraints and have adopted protectionist measures to protect the domestic industry and circumvent the recessionary trends. Some restrictions are discussed below.2. Different type of restrictions in the form of tariff and non tariff barriers are in existence. As a result. The global slowdown affected them at different point in time. Some salient restrictions are discussed below. I Restrictions in India : Indian market is not free from restrictions. In the automobile and auto-component sector there is a strong opposition from the domestic industry and certain industry associations such as Society of Indian Automobile Manufacturers (SIAM) and Automotive Component Manufacturers Association of India (ACMA). and implementation of technical regulations. banking services. security services. In India. local financing and binding system. the average tariffs are higher than that of the EU. government intervention. relatively limited demand. cumbersome bureaucratic procedures and a clogged judicial system where case 139 . management and dispute settlement mechanism in case of labour. customs and clearance procedures and visa related problems. Apart from these tariff-related barriers. adoption. legal and accounting services and telecommunication services. Issues related to the Indian government’s development. motion pictures. There are also concerns regarding India’s notification process for amendments of certain regulations. credit retrieval. standards and conformity assessment procedures have not been very conducive for trade in several products. high competitiveness. Visa related problems. These include poor infrastructure. In India tariff is used as a tool to protect the domestic industry and it is also a source of revenue. high production cost. (b) Restrictions in Service Sector : There have been a plethora of barriers to foreign service providers on insurance services. there are several non-tariff barriers that exists in India. In agricultural goods tariff level is pretty high.Restrictions in Merchandise Trade : (a) High Tariff : India’s tariff rates are at very high level on some of the products categories that constitute a major portion of EU’s exports. are against the reduction of import duties on passenger vehicles and two-wheelers. the hiring. Within quota. Merchandise Trade : (a) Tariff Barriers : European Union maintains high tariffs on several agricultural products. lack of proper infrastructure i. communication etc are some of the factors prohibiting European industries to respond favourably to India opening up to the west.can linger on for several years etc have been most cited barriers to trade in services. Still there exists lot of non.e. power. Frequent changes in policies. (c) Restrictions in Foreign Direct Investment (FDI) : India is still not considered as an ideal place for investment.transparencies in India’s policy regime for attracting foreign investment. The largest bottleneck to transfer of new technologies from European Union to India is the lack of effective protection of intellectual property rights in India.) II Restrictions in European Union : Trade and investment barriers exist in European Union too. tariff 140 . which are of interest to India and is highly protected through different forms of subsidies under “green box”. (For instance. price control regulations have undermined the incentives for foreign investors to increase their equity holdings in India. Relatively European Union market is more open than India. This often discourages western companies to transfer their technologies to India. “blue box” and “amber box”. In some sectors. some companies report that they are forced to renegotiate their contracts in the power sector as a result of ruling government changes at the central and state levels. to adhere to those standards. Indian companies and industry associations have pointed out that non tariff barriers in the European Union have increased after the global slowdown and euro zone crisis. One example is REACH (Registration. Also. testing. resins gums and other vegetable group of products are among the groups with the highest RCA for India. EU has already banned some chemicals used in the textile industry. EU-member states still maintain widely different standard. Another sector of interest to India is textile and apparel products. EU tariff rates are very high on some products where India exhibits maximum RCA. Indian companies have raised concern about the higher standards in the EU which increases the costs of companies.rates are very low but over quota tariff rates are very high and prohibitive. These differences may serve as effective barriers against the free movement of products . Authorization and Restriction of Chemical substance). This ban will adversely affect India’s export prospect in the EU.Many of these NTB’s have adverse impact on India’s export potentiality to the European Union. especially small and medium enterprises. lac. and certification procedures for some products. 141 . Bound tariffs on these products in EU are significantly high. (b) Non Tariff Barriers : EU has been emerging as one of the most standard-conscious countries in the world. Another challenge to India’s export in the EU is the emergence of new issue in the multilateral trade discussions. Recently EU passed stringent laws on environment and eco-labeling. For example. Emergence of social clause is also another area of great concern for Indian exporters to the EU. Evaluation. For instance. (d) Visa and Work Permit Related Issues : There are several visa and work permit related issues. In the EU. member states restrict their intra-EU mobility. 142 .(c) Restrictions in Services Sector : Despite the importance of the services sector and its growing share in bilateral trade between these two partners. Although Schengen visa permits multiple entries for business visitors into the states that are signatories of the accord. There are other issues such as changes in the visa regime and high visa fees. but the service providers have to first enter the country which gives the visa. faced by the Indian service providers. an Indian software consultant with a work permit in UK cannot offer services in other EU countries. there are significant barriers to services trade between the two. India is interested in greater investments from the EU and improved market access for 143 . the Blue Card Directive was introduced in 2009. intra corporate transferees. There are also issues related to the definition of professionals under different categories namely four categories of movement: business visitors. Similarly. Regulations and conditions differ across the member states. contractual service suppliers and independent professionals.(e) Lack of Harmonisation in EU: Lack of harmonisation of qualifications and professional standards have made it difficult for Indian professionals to service the EU markets. Like goods. However. 6. the EU does not have a single market for services and most of the issues related to the movement of people such as work permits and visas are at the Member State Level. the process of European economic integration and economic liberalization in India has created tremendous opportunities for European Union and India. In the last two decades. In an attempt to harmonise the EU labour market. Cyprus and Greece have not yet transposed the provisions of the EU Blue Card into their respective national legislations. The EU is interested in growing an unsaturated Indian market with investment potential. few member states such as Austria. the Indian companies and even sub-contracting parties have to meet the lengthy and cumbersome requirements laid down under the EU directive on data protection which increase their cost of operation. As a result.3 Recommendations : Trade and economic relations with Europe have always been very important for India. (f) Data Protection: India has not been accorded the status of a data secure nation by the EU. It should be reduced to more moderate level . though it has been reduced but still very high. India should change its concept of Intellectual Property Rights (IPR). The EU can take steps to streamline the work permit and visa regime across member states by implementing directives such as the proposed directive on conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer. Indian customs require extensive documentation. (iv) India’s customs valuation methodologies do not reflect actual transaction values and sometimes increase the effective tariff rates. due to a complex tariff structure and multiple exemptions. The EU can work with India to make necessary changes in the Indian regulations so that India becomes compliant with the safe harbour nation requirements for data protection. (ii)Indian market and production system are characterized with large scale piracy of foreign products and technologies by changing process of production and Indian market is flooded with spurious and counterfeit goods. foreign companies hesitate to invest in India. India has the 4 th highest levels of restrictions to FDI in the world. Also. Because of these restrictions inflow of investment is not as much as it should be. as because of this. The aim of this Directive is to remove barriers to entry and movement of intra corporate transferees into and within the EU member states.temporary movement of professionals. which leads to frequent 144 . Government should liberalise the policies regarding FDI. (iii) FDI restrictions are very high in India. The research study has focused on the following recommendations to further strengthen India-EU trade and economic relations : (i) Tariff rates in India are very high. Government should try to initiates (a) domestic reforms (b) regulatory certainty and transparency. science and technology. Concluding Paragraph : One of the reasons for the lack of progress in the trade negotiations has been the slow process of reforms in India. If India has Domestic Reforms. To avoid these difficulties. dispute settlement in case of labour is cumbersome. There exist tariff and non tariff barriers and both economies need to remove sector specific barriers to improve trade and investment relation. tourism.processing delay and inhibits the free flow of trade . So India should made it’s domestic manufacturing base sound and competitive. this will lead to inflow of FDI from EU into infrastructure services and manufacturing and also enable India to become a part of the production network of the EU companies. (v) Infrastructure in India is weak. Regulatory Certainty and a Transparent Regime. The study found that there is significant scope for enhancing bilateral investment flows between 145 . high cost of production. construction and related services and human resources development where collaborative relations can further strengthen. the government policies should be transparent. It will lead to inflow of FDI from EU as there is a tremendous scope for EU companies to participate and collaborate in the infrastructure and construction sectors. (vii) There is a tremendous scope in the healthcare sector. government intervention is high. (vi) With the rise in labour cost in china India with a sound infrastructure base can offer an alternative manufacturing base for EU companies. partly due to the global slowdown and other macro-economic and political instabilities. Indian and EU companies face several barriers in each other’s market and reforms in both economies have slowed down. development of infrastructure in India is a priority and requires both advanced technology and huge investment. If recommendations of the study are implemented. agricultural instruments. Since. India and European Union have a close diplomatic and economic relationship and trade and investment flows between the two economies have increased over time. there is tremendous 146 . plastics. There are opportunities for small and medium-sized EU companies to synergise with Indian SMEs in the areas of auto parts. The two economies are trying to strengthen their relationship through a comprehensive trade agreement known as the India-EU BTIA. the share in total FDI inflows to India has declined. EU companies can have better access to the large and unsaturated Indian market. software etc. Though foreign investment from EU has increased over years. textiles. multi-media.India and European Union. it is likely to benefit both Indian and European Union companies in each other’s market. Despite these benefits the progress of the India-EU BTIA negotiations is slow. If barriers to trade and investment are removed or even reduced under the BTIA. the BTIA will be the EU’s first comprehensive trade agreement with a large emerging market. construction and logistics will be beneficial for India. they will not only enhance bilateral investment flows but also enhance the global competiveness of Indian companies and increase investment inflows in the manufacturing and infrastructure sectors. which India needs urgently. which will benefit companies from both economies. Once signed. semi-conductors. India needs investment in infrastructure and investment by EU companies in sectors such as green energy. tourism. healthcare. broadcasting. science and technology. construction and related services and human resource development where collaborative relations can be further strengthened. There are areas such as information technology.scope for EU companies to participate and collaborate in the infrastructure and construction sectors. 147 . pharmaceuticals. 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NOT ELSEWHERE SPECIFIED OR INCLUDED.3 76 0. 0. 11 0. 0. COFFEE.3 1 3. 5. 0.8 43 0. MATE AND SPICES. TEA. PRODUCTS OF ANIMAL ORIGIN. MOLLUSCS AND OTHER AQUATIC INVERTABRATES.6 62 4.8 0. 6 57 09 3.0 7 0. 10 40 0 0.2 16 0.2 04 0. 0. 0.1 73 0. 80 18 41 6 4 3.5 09 0. LIVE TREES AND OTHER PLANTS. 2 MEAT AND EDIBLE MEAT OFFAL.3 4. 11 25 4 8 0. 9.7 0 5.5 1 2.3 5 6. 92 .3 0.1 1 6.0 08 0. 0.1 9 N A 4. 5.3 0. 0. 3. . 0. OR INCLUDED. 5.3 35 0. 6.0 4. 0.8 3 7.2 20 0. 10 6.1 0. 8 84 34 4.0 52 0. 83 13 13 2 4 0. 160 0.0 36 0. 01 05 01 2 6 2 0. 46 31 64 8 1 0. 16 5.0 5 7.0 62 0. 22 49 54 0 0. 0.0 76 0.6 1 7. 52 48 27 2 5 0. 0.9 1 8 0.0 62 0. NATURAL HONEY.1 0. EDIBLE FRUIT AND NUTS.1 23 0.0 37 0. NOT ELSEWHERE SPEC. 07 4 2.2 10 0. 5. 1. 2 91 48 1.5 3 FISH AND CRUSTACEANS. 18 62 48 . 3. BULBS.6 2. EDIBLE PROD.3 8.5 0.3 4 5 6 7 8 9 10 CEREALS. ROOTS AND THE LIKE. 2 89 76 10. 0.4 03 0. 2.0 6 7.6 05 2. PEEL OR CITRUS FRUIT OR MELONS.0 25 0. 0. 15 01 02 9 0 0. 1.3 39 0. DAIRY PRODUCE.0 43 0.0 5 4. 16 39 38 1 7 4. BIRDS' EGGS. 0.8 0. 01 7 0.0 8 2.6 1 4.1 2.7 5.2 42 0.5 20 1.6 23 3. 0.0 0. OF ANIMAL ORIGIN. 11 12 13 14 15 16 17 18 PRODUCTS OF THE MILLING INDUSTRY; MALT; STARCHES; INULIN; WHEAT GLUTEN. OIL SEEDS AND OLEA. FRUITS; MISC. GRAINS, SEEDS AND FRUIT; INDUSTRIAL OR MEDICINAL PLANTS; STRAW AND FODDER. LAC; GUMS, RESINS AND OTHER VEGETABLE SAPS AND EXTRACTS. VEGETABLE PLAITING MATERIALS; VEGETABLE PRODUCTS NOT ELSEWHERE SPECIFIED OR INCLUDED. ANIMAL OR VEGETABLE FATS AND OILS AND THEIR CLEAVAGE PRODUCTS; PRE. EDIBLE FATS; ANIMAL OR VEGETABLE WAXEX. PREPARATIONS OF MEAT, OF FISH OR OF CRUSTACEANS, MOLLUSCS OR OTHER AQUATIC INVERTEBRATES SUGARS AND SUGAR CONFECTIONERY. COCOA AND COCOA PREPARATIONS. 49 38 14 2 1 1. 0. 2. 93 68 71 9 67 3.7 6 4 06 00 0 7 2.7 2. 2. 3 93 27 49 08 98 23 0.7 75 1.0 1.5 1.3 9 1. 0. 0. 18 59 91 7 0 0.9 10 1.2 0. 0. 1 77 91 2 6 0.8 88 0.8 97 0.7 98 0.9 84 0. 0. 0. 55 18 60 1 0 4 0.7 05 0.7 0. 0. 57 84 67 4 3 0.8 37 0.8 18 1.0 58 1.4 0 0. 0. 0. 49 01 31 6 6 3 0.0 62 0.4 0. 0. 87 92 64 7 9 0.2 67 0.1 94 0.1 4 0.1 65 0. 6. 0. 01 63 02 1 6 0.0 24 5 0.0 0. 0. 36 04 04 0 5 0.0 34 2 0.0 30 0.0 29 0.0 59 1. 0. 5. 74 87 24 8 5.8 9 3.2 3. 4. 8 44 39 3.1 4 3.4 6 2.6 2 5.2 7 0. 0. 0. 48 81 21 8 8 0. 0. 1. 91 64 04 4 9 0.2 96 3.0 2. 85 55 2. 0 0.1 51 0.4 63 2.4 9 0.7 01 0.7 9 0.9 0. 1. 79 69 15 9 9 1.0 4 1.1 2 1.0 4 1.3 1 161 19 20 21 22 23 24 25 26 27 28 PREPARATIONS OF CEREALS, FLOUR, STARCH OR MILK; PASTRYCOOKS PRODUCTS. PREPARATIONS OF VEGETABLES, FRUIT, NUTS OR OTHER PARTS OF PLANTS. MISCELLANEOUS EDIBLE PREPARATIONS. BEVERAGES, SPIRITS AND VINEGAR. RESIDUES AND WASTE FROM THE FOOD INDUSTRIES; PREPARED ANIMAL FODER. TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES. SALT; SULPHUR; EARTHS AND STONE; PLASTERING MATERIALS, LIME AND CEMENT. ORES, SLAG AND ASH. MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION; BITUMINOUS SUBSTANCES; MINERAL WAXES. INORGANIC CHEMICALS; ORGANIC OR INORGANIC COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH METALS, OR RADI. 0. 0. 1. 47 81 07 9 2 0.8 98 1.1 2. 2. 9 00 79 3.4 7 3.6 2 3.6 5 5.1 9 0. 2. 0. 73 04 67 7 9 4 1.5 2 1.6 1. 1. 5 38 78 2.1 6 2.0 6 2.2 7 2.5 7 0. 4. 2. 55 35 36 9 1 6. 0. 1. 64 35 24 2 0. 0. 0. 77 89 42 4 0 1 1.5 9 2.2 2. 2. 0 03 28 1.8 7 2.3 0 2.2 1 2.2 7 1.5 9 4.2 4. 3. 7 45 19 1.6 7 2.9 5 3.6 1 3.9 5 0.4 10 0.5 0. 0. 26 54 65 1 3 0.6 48 0.8 16 1.0 6 0.8 2 1. 0. 0. 10 34 43 0 3 0.5 53 1.3 1. 0. 6 10 77 0.6 29 0.5 80 5 0.7 56 1.2 3 0. 0. 0. 28 12 36 8 2 4 0.3 38 0.3 N 83 A N A 0.5 59 0.4 45 0.4 52 0. 0. 0. 05 01 06 0 1 8 0. 0. 0. 01 29 01 5 3 5 0.0 97 0.1 50 0.0 13 5 0.0 15 0 0.0 72 5 0.0 22 6 0.0 36 0.0 13 9 0.0 0. 0. 46 03 04 9 1 9 0.0 0. 0. 19 01 01 9 2 7 0. 0. 0. 21 84 30 7 7 0 0.2 61 1 0.3 0. 0. 31 37 36 2 0.4 36 1 0.6 50 0.5 76 0.7 02 162 N A 0.0 30 0.0 23 2 ELEM. OR OF ISOTOPES. 29 ORGANIC CHEMICALS 30 PHARMACEUTICAL PRODUCTS 31 FERTILISERS. 32 TANNING OR DYEING EXTRACTS; TANNINS AND THEIR DERI. DYES, PIGMENTS AND OTHER COLOURING MATTER; PAINTS AND VER; PUTTY AND OTHER MASTICS; INKS. ESSENTIAL OILS AND RESINOIDS; PERFUMERY, COSMETIC OR TOILET PREPARATIONS. SOAP, ORGANIC SURFACE-ACTIVE AGENTS, WASHING PREPARATIONS, LUBRICATING PREPARATIONS, ARTIFICIAL WAXES, PREPARED WAXES, POLISHING OR SCOURING PREP. ALBUMINOIDAL SUBSTANCES; MODIFIED STARCHES; GLUES; ENZYMES. EXPLOSIVES; PYROTECHNIC PRODUCTS; MATCHES; PYROPHORIC ALLOYS; CERTAIN COMBUSTIBLE PREPARATIONS. 33 34 35 36 0. 3. 0. 88 66 90 3 8 3. 0. 4. 15 16 16 5 0. 1. 0. 01 48 15 9 5 1. 2. 1. 43 25 57 0.8 61 0.8 0. 0. 67 83 98 4 8 3.3 2. 3. 7 73 51 1.0 7 0.9 25 0.9 40 1.0 5 3.0 9 3.7 8 4.1 7 3.7 7 0.2 37 0.3 26 0.2 76 0.1 23 1.5 4 0.0 0. 0. 99 00 24 7 4 1.7 1. 2. 0 73 01 1.7 1 1.8 4 1.7 6 2.0 7 1. 1. 2. 64 81 19 2.4 4 2.4 2. 2. 9 27 94 2.6 4 2.7 6 2.8 1 3.0 34 1. 1. 2. 55 86 02 2.0 6 2.3 2. N 7 27 A 3.0 4 3.0 1 3.2 4 3.5 2. 15 1. 14 .5 70 1 1.9 9 1.9 2. 2. 5 13 18 2.0 2.5 N A 3.2 0 1. 30 4.6 1 3.3 1. 1. 4 67 96 1.6 2 6.0 9 10. 74 1. 6. 0 38 163 3.3 3 0.2 18 7.5 4 FURSKINS AND ARTIFICIAL FUR. 3.7 0 1. PULP OF WOOD OR OF OTHER FIBROUS CELLULOSIC MATERIAL. 42 43 44 45 46 47 MANUFACTURES OF STRAW. BASKETWARE AND WICKERWORK. MISCELLANEOUS CHEMICAL PRODUCTS. 4 2. 8 33 62 1.9 71 05 8 7 0. 1.5 4 2.3 2.6 6 6.3 70 0. 1. 2.2 4 0.4 4 1.1 7 1.5 8 1.5 4 . 8. 73 19 0 0 2. 41 RAW HIDES AND SKINS (OTHER THAN FURSKINS) AND LEATHER ARTICLES OF LEATHER.9 4 1. 20 85 62 2 0.7 8 2. PLASTIC AND ARTICLES THEREOF. 1.7 3 1.0 6 1.8 5 1.9 4 164 3.5 8 1. 75 08 12 0 1.5 2 1.3 0. 9 09 22 1.8 9 3. WOOD CHARCOAL.3 9 5.1 41 0.9 5 0.37 38 39 PHOTOGRAPHIC OR CINEMATOGRAPHIC GOODS. 2. 4 27 61 1. 1.6 1.3 06 0.9 9 1. 1.3 79 0. 4. 2 39 39 1.6 1 1.4 1. 24 67 22 0 8 2. 1 90 64 1. OF ESPARTO OR OF OTHER PLAITING MATERIALS.0 1.3 01 0. 0. HANDBAGS AND SIMILAR CONT. 8 48 08 5 2. 1. 0 05 21 2.9 0 1.3 6 2.TRAVEL GOODS. . 1. 1.5 8 2.1 5 1. 23 89 42 1.1 2 3. 51 26 86 1.4 4 1. 5 73 96 9. 1. 0 36 1. 15 20 0. 1. 1. 0.2 3.2 1.1 5 4.5 25 4. 66 52 95 0 3 1.4 7 6.7 9 1.0 3 2. 0.3 6 2.2 1. 81 33 52 7 0 0. 0. 1.1 0.1 19 0. 0.9 1.1 1.4 5 0.6 7 1. 40 RUBBER AND ARTICLES THEREOF.5 2 1.7 6 2. WASTE AND SCRAP OF PAPER 0. CORK AND ARTICLES OF CORK. 1.0 0 1. 0.3 0 1.9 8 5.1 7 1. 0. 33 31 43 6 4 4. WOOD AND ARTICLES OF WOOD. 0.SADDLERY AND HARNESS.2 2.4 66 0.3 5 1. MANUFACTURES THEREOF. 1. 2. 54 26 21 5 13 0. 1.4 7 1.5 7 1.0 0 1. 86 42 25 4 1.4 87 0. 2.5 1.ARTICLES OF ANIMAL GUT(OTHR THN SILK-WRM)GUT. 2 1. 0 43 39 7 1 0. 2.2 8 1. 7 12 29 0.3 1.3 19 0. 0. 25 73 29 5 9 1. 72 11 22 1. 37 23 26 9 0.3 42 0.3 0 1. 0.5 3 2.7 63 1.6 81 0.7 6 1. 18 01 01 7 8 0. 3 1. 48 49 50 51 52 53 54 PAPER AND PAPERBOARD.4 16 0.9 2 0.9 7 1.4 1.0 5 2.7 7 . 0.9 0.5 17 0. 1.2 4 1.3 7 165 1.0 19 0.5 64 0. 84 09 23 2.9 2.5 1. SILK WOOL. 1. 1.6 48 0. HORSEHAIR YARN AND WOVEN FABRIC. 34 85 28 0 0. MAN-MADE FILAMENTS. 1. FELT AND NONWOVENS. 56 WADDING. PICTURES AND OTHER PRODUCTS OF THE PRINTING INDUSTRY.5 63 0. 2.3 0.2 0 1. 35 56 43 1.3 3 1.0 0. 0.5 62 0.5 5 1.4 36 0. SPACIAL YARNS. 51 23 95 5 7 1. PRINTED BOOKDS. ARTICLES OF PAPER PULP. 1. 13 80 33 0 4 9 0. 0.5 85 0. 55 MAN-MADE STAPLE FIBRES. 94 45 99 8 8 4 0. 0.9 7 1. 0.5 1 2. 1. CORDAGE.5 55 0. 5 09 82 2.9 9 2. TWINE. TYPESCRIPTS AND PLANS.0 N 22 A 0. OTHER VEGETABLE TEXTILE FIBRES.0 5 2. 3 42 55 2.7 4 2.0 7 2.2 7 2. 01 0 01 1 7 0.3 90 0.5 4 2. 1. 1. 5 28 97 2.1 2. OF PAPER OR OF PAPERBOARD. 0. FINE OR COARSE ANIMAL HAIR. 21 69 58 4 9 0. 1. PAPER YARN AND WOVEN FABRICS OF PAPER YARN. CARPETS AND OTHER TEXTILE FLOOR 57 1. NEWSPAPERS. 0.6 1 1. 0 00 7 1.5 82 0. 27 89 33 0. COTTON. 0.1 7 0.5 81 0.5 39 0. MANUSCRIPTS. 2.9 16 0. 0. 1.4 0. ROPES AND CABLES AND ARTICLES THEREOF.6 72 0.6 3 1. 0.0 35 0. 1. 0.9 4 1.OR PAPERBOARD. 99 48 66 9 5 0.9 1. 0.8 0.0 12 2 0. 1. 0. KNITTED OR CROCHETED FABRICS.1 0 1. 0.4 07 0.5 8 0.3 49 0. WORN CLOTHING AND WORN TEXTILE ARTICLES. 96 08 68 0 6 4 0. 1. LACE.6 1. 0.8 56 0. 1.1 8 1. 2. EMBROIDERY. 0.6 0.1 9 2.5 9 0.0 87 166 1.7 91 0. 91 74 62 9 5 2 0. 40 86 03 0 0. 88 87 77 7 5 0.6 80 0.1 14 0.0 57 0. 0. 07 05 04 7 1 0. 2.4 63 1. 03 18 01 3 0 0 1.6 30 0.5 11 0.4 3 2. 79 82 73 4 1. TRIMMINGS. RAGS FOOTWEAR. 0.7 6 1.7 0. 1. OTHER MADE UP TEXTILE ARTICLES. NOT KNITTED OR CROCHETED. 11 0. ARTICLES OF APPAREL AND CLOTHING ACCESSORIES.9 53 0. 0.1 46 0. 0. SETS. 9 19 1.5 8 1. 3 09 54 1. HEADGEAR AND PARTS THEREOF.9 4 2. SEAT-STICKS.7 05 0. 2.7 53 1.1 1 0. 11 78 41 2. COATED.6 97 0. 0. IMPREGNATED. 2.2 9 1.4 39 0.1 0. UMBRELLAS.6 0. TUFTED TEXTILE FABRICS. 0. 0. 1. WHIPS. PARTS OF SUCH ARTICLES.8 57 0. 72 69 . SUN UMBRELLAS. 48 60 71 5 4 0. COVERED OR LAMINATED TEXTILE FABRICS.1 1 1. 7 0.1 43 0. 0.0 5 0. TAPESTRIES.7 45 0.RIDING-CROPS AND PARTS THEREOF. 8 06 32 2.5 2 1.9 05 3.8 86 0.6 2.4 90 0. 0. 0. 58 59 60 61 62 63 64 65 66 SPECIAL WOVEN FABRICS.9 0.5 20 0.2 2.9 4 1.7 67 0. 75 50 65 5 5 1. 62 93 10 0 9 1. 1.9 2. 68 01 75 4 0 0. 0. 1.8 3 1.8 69 0.COVERINGS.7 13 0. 65 63 65 8 9 0. 02 38 44 7 2 1. WALKING-STICKS.2 7 2.0 6 0. TEXTILE ARTICLES OF A KIND SUITABLE FOR INDUSTRIAL USE. ARTICLES OF APPAREL AND CLOTHING ACCESSORIES. GAITERS AND THE LIKE. KNITTED OR CORCHETED. 0. 4 63 70 2. ARTICLES OF HUMAN HAIR.9 N 12 A 0. 1. 80 TIN AND ARTICLES THEREOF.PRE.1 4 1.9 65 0.4 39 2.2 20 0. 7 46 15 2. 0.9 1 1. 2.9 52 0. MICA OR SIMILAR MATERIALS. 26 49 05 1.1 2 1. CEMENT. 5 18 46 2.8 12 1. CERAMIC PRODUCTS.0 1. 1.2 1 1.4 5 1. 81 06 31 1.9 1. 34 92 61 9 3 1. 1. 1.0 0 2. 3 03 59 2. 79 ZINC AND ARTICLES THEREOF.1 0.6 0.1 0. 1.1 8 1.9 38 0.1 2 0.METAL AND ARTCLS THEREOF. 1.3 1. 0. 2. 1.METALS. 0. 71 59 72 1. 1. 2.3 3 2.7 8 1. 0. 13 91 12 1.3 1.JEWLR Y. 15 61 36 1. 81 0. 2.0 9 2. 1.0 6 2. 1.9 1. 1 98 20 1. OTHER BASE METALS.8 4 2. 75 NICKEL AND ARTICLES THEREOF. GLASS AND GLASSWARE.2 8 1. IRON AND STEEL ARTICLES OF IRON OR STEEL COPPER AND ARTICLES THEREOF.0 167 0. 52 36 68 3 3 1.5 1.0 9 2. 0.4 59 1.9 6 2.5 1.0 1. 59 57 61 9 0. 36 26 43 5 0.IMIT.9 2. 1. 1.9 7 0.9 7 3.8 3 2.67 68 69 70 71 72 73 74 PREPARED FEATHERS AND DOWN AND ARTICLES MADE OF FEATHERS OR OF DOWN. 50 64 25 1. 1. 5 87 12 1. ARTICLES OF STONE. 36 25 06 7 3.3 1.9 2.2 0 1.8 6 0. 2. 1. ASBESTOS.COIN.2 2. NATURAL OR CULTURED PEARLS.7 0. 3.3 8 1.4 4 2.6 1. 0. 2.8 11 1.3 4 1. 49 07 16 2 0 0.1 8 2.9 50 2. 1. 0 21 53 2.2 74 2. 1. 55 29 28 6 0.2 72 0.8 9 1.0 3 1.3 7 1. 78 LEAD AND ARTICLES THEREOF. 48 89 1. 2.9 0. 2.0 2.0 1.6 8 1. 74 90 90 1. PLASTER.1 5 2. 0. 2.2 7 1. 2.8 6 1. 2 44 62 1.4 3 1.4 5 2. 1.3 1.6 1 1. CLAD WITH PRE. ARTIFICIAL FLOWERS.2 6 1. 0. 77 73 85 2 7 7 1.4 8 2. 1.PRECIOUS OR SEMIPRECIOUS STONES.6 4 2. 76 ALUMINIUM AND ARTICLES THEREOF. 1. 1.3 2 1. 1.5 9 2.8 9 2.0 2. 1.1 2 2.5 7 0. 1. 2.9 18 0. 2 72 15 1.2 8 1.7 7 2. 0.2 7 . 23 91 31 1 5 0 0.9 8 1. AIRCRAFT. 0 33 65 2.6 1 2. 1. 1. PARTS THEREOF OF BASE METAL.0 2. RAILWAY OR TRAMWAY LOCOMOTIVES. MACHINERY AND MECHANICAL APPLIANCES.9 2 2.0 95 2. 1. 58 50 87 2. 56 94 96 2.1 3 4. 92 42 2. ROLLING-STOCK AND PARTS THEREOF. ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF.6 6 2.3 4 1.4 2 1. OF BASE METAL.0 2.4 0 2. 4 26 1. 2. 6 1.2 3 1.2 2 1. 0 68 73 2. 1. 98 49 64 1. 1. MISCELLANEOUS ARTICLES OF BASE METAL. 4 14 29 3. 97 02 38 2.9 9 1.4 9 8. SPOONS AND FORKS.1 4 2. 1. 0.4 6 1. CUTLERY.5 6 3.8 2. 2. 1.5 9 6. ARTICLES THEREOF. AND PARTS AND ACCESSORIES THEREOF.8 8 3. TOOLS IMPLEMENTS.4 9 1.4 6 2. NUCLEAR REACTORS. 2.6 9 2. RAILWAY OR TRAMWAY TRACK FIXTURES AND FITTINGS AND PARTS THEREOF. 89 16 2.82 83 84 85 86 87 88 CERMETS.2 7 2.6 8 2.3 1. BOILERS. 1. 3 37 65 2.4 2. 1.9 8 3.3 1.3 2 3.5 0 1.4 2. PARTS THEREOF. 2 75 04 2.3 7 2.0 1 2. MECHANICAL VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING STOCK. 2.4 6 3.3 1 N A 1. 1. 2. 50 93 52 1. AND 30 91 48 9 1 39 88 1 2 5 6 1.1 5.4 6 2. TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS. SPACECRAFT. SOUND RECORDERS AND REPRODUCERS.3 7 3.0 4 2.AND PARTS.9 5 2. 3. 2. 2.2 3 168 . 81 27 12 2. 3 02 .6 9 1. 37 1.6 2 40. BEDDING. 54 12. 0 0 28 8 0.0 7 3.3 8 1.0 8 1.7 97 0. 2. 2 62 17 2. 0. 1. WORKS OF ART COLLECTORS' PIECES 3 0.9 0 7. 9.5 0 3. 55 02 36 5 4 7 0. 80 44 63 9 1. CUSHIONS AND SIMILAR STUFFED FURNISHING.2 0.2 70 0. 19 41 18 2 1 7 1.2 38 0. 0. MEDICAL OR SURGICAL INST.3 82 2.PARTS THEREOF.2 8 0.2 38 0. 0. LAMPS AND LIGHTING FITTINGS NOT ELSEWHERE SPECIFIED OR INC TOYS.5 7 2.4 0. FURNITURE.3 1 2. CHECKING PRECISION.6 3 0.4 93 0.1 8 9. BOATS AND FLOATING STRUCTURES. 41 21 70 .7 43 1. 02 18 11 .3 7 2. 33 169 2.6 9 2 24. 1. MATTRESSES. CLOCKS AND WATCHES AND PARTS THEREOF. 89 90 91 92 93 94 95 96 97 SHIPS.6 2. PHOTOGRAPHIC CINEMATOGRAPHIC MEASURING. 29 65. 4 32 73 1. 2.6 1. 0. 30 21 22 5 7 2. PARTS AND ACCESSORIES OF SUCH ARTICLES. OPTICAL. MATTRESS SUPPORTS.1 1. 0.2 60 0. GAMES AND SPORTS REQUISITES. 2. 0. N 32 A 2.3 03 0.6 0 1.3 3 0. 81 54. 4.0 98 0. 2.2 65 5. 2 41 90 0.7 56 0.0 0. 56 47 81 9 5 0. 1. 0.8 5 3. 3 24 45 1.6 0. ARMS AND AMMUNITION. 34 31 38 1. 83 18 23 8 0. 0.3 04 0.3 1.2 09 0.2 44 0. 0. MISCELLANEOUS MANUFACTURED ARTICLES.3 76 0.6 2 1.5 . 2.0 68 0.6 51 0. PARTS AND ACCESSORIES THEREOF. PARTS AND ACCESSORIES THEREOF.5 8 2. 01 98 05 1 3 1.9 10 3. 1. 0. 0. 1.3 70 2. MUSICAL INSTRUMENTS. AND APPARATUS PARTS AND ACCESSORIES THEREOF. 41 46 52 7 6 0. 90 34 34 6 1 0.4 3 0.3 44 0.5 46 1. SOME SPECIAL USES. 99 MISCELLANEOUS GOODS. 98 PROJECT GOODS.1 81 57 58 60 60 . RC A> 1 N A 0.1 0.2 N 11 A 0.AND ANTIQUES. N N N 31 A A A 8 N N 0.2 54 0. 0. 27 42 8 3 59 62 N A N A N A N A 0. 0.1 A A 44 54 47 0 52 51 55 56 59 170 N A N A 0. 171 .