EUROPEAN UNION

EU

The European Union (EU) is a union of twentyfive independent states based on the European Communities and founded to enhance political, economic and social co-operation. Formerly known as European Community (EC) or European Economic Community (EEC). Date of foundation: 1st November, 1993. New members since 1st January, 1995: Austria, Finland, Sweden. Euro currency

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden United Kingdom of Great Britain and Northern Ireland Ten countries have joined the EU on 2004-05-01: Cyprus , the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

The Schengen Visa There is a single visa for all the EU countries, except the United Kingdom and Ireland, called the Schengen Visa. Although Norway and Iceland are not members of the EU they implement the Schengen Visa scheme. This visa allows a person to visit one or several of the Schengen countries for business, tourism and visiting relatives for maximum of 90 days every six months. The European Commission Delegation has no responsibilty for issuing visas. The Member State Embassies continue to provide this service. The purpose of the Schengen Agreement is to enable people to move freely between the countries that are a party to it. All who enter or leave the Schengen Zone, however, are to be carefully checked.

The cornerstone of European Union's link with India lies in its trade and investment relationship.
The EU is India's largest trading and investment partner. The bilateral trade constitutes a quarter of India's total trade while EU investment is around 14 percent of India's total foreign direct investment inflows received during the period 1991 to May 2002.

At the Business Summit of the Third EU - India Summit held in Copenhagen in 2004, it was decided to set a bilateral trade target between EU and India of 35 billion Euros (Rs. 1,75,000 crore) by 2005 and 50 billion Euros (Rs.2,50,000 crore) by 2008. This implies a compound growth rate of around 14 percent in the next five years.

In 2002, the main products exported by India to EU were textiles and clothing, gems and jewellery, leather and leather goods, engineering goods, chemicals and allied products and agriculture and allied products.
It is interesting to note that textiles and clothing, leather and leather goods and gems and jewellery constitute more than 55 percent of total Indian exports to EU.

The trends of commodity exports from India to EU, follow a predictable pattern in most years. This has been an area of concern for policy makers on both sides and efforts have been made in recent years to widen the basket of goods that can be traded between the two trading partners. One of the major initiatives that have been launched in this context has been the Joint Sectoral Studies that have been conducted between the private sectors of both sides. So far, eight sectoral studies, namely, food processing, mechanical engineering, information technology, telecommunications, energy and power, textiles, biotechnology and financial services, have been conducted.

Industry has made detailed joint recommendations to enhance trade and investment co-operation between EU and Indian industries. Some of the recommendations have already been implemented, while Working Groups have been formed to look at the other suggestions for further policy action. EU and India are already solid partners in Trade and Investment, but even larger opportunities lie ahead for business and industry and the European Commission is actively co-operating with Indian counterparts to fully exploit this potential.

Our major items of export to Europe are gems and jewellery, textiles including yarn / fabrics / made-ups / readymade garments, drugs & pharmaceuticals, leather garments / goods / footwear, finished leather, machinery and instruments, manufactures of metals, handicrafts, transport equipment, coffee, dyes/intermediates, organic / inorganic / agro-chemicals, carpets, marine products, plastics and linoleum products, cashew, tea, electronic goods etc.

The major items of import from Europe are gold & silver, pearls, precious & semi-precious stones, machinery, project goods, electronic goods, organic chemicals, iron & steel, professional instruments, transport equipment, medicinal & pharmaceutical products, machine tools, artificial resins, plastic materials, manufactures of metals, paper board & manufactures, metalifers ores & scrap, non-ferrous metals, petroleum crude & products, etc. Pearls, precious/semi-precious stones, machinery and gold accounted for about 50% of our imports from Europe during 2002-03.

European Union is India's largest trading partner. However, despite the fact that more than US $ 11 Billion exports of India are directed to EU, India's share in EU's global imports is around 1% and India ranks 20th as EU's trading partner. With nearly 370 million citizens with high purchasing power and a common currency (Euro) in most of the EU countries, it is also Indias largest potential market. Foreign direct investment (FDI) approved from EU countries from January, 1991 to March, 2003 is over US $ 16 billion out of which the actual inflow is over US $ 5 billion. The top sectors attracting FDI and technology transfer from EU are fuels(power & oil refinery), telecommunications, transportation industries, chemicals(other than fertilizers), metallurgical industries, electrical equipments (including computer software & electronics) and industrial machinery.

INDIA-EUROPE TRADE (Value in US $ Million)

More than 3400 technical collaborations have been approved with companies from EU countries. The UK, Germany, the Netherlands and France are among the top 10 countries from which FDI has been approved in India during the above mentioned period. India and the EU countries have enjoyed healthy economic relations both individually and collectively.

These relations are built on the foundations of (i) India-EU Cooperation Agreement on Partnership and Development which came in to effect in August, 1994; (ii) India-EC Joint Commission. India also has bilateral framework Agreement with some individual EU countries in areas such as trade, investment, taxation, textiles, civil aviation, tourism, science and technology, agriculture, etc. India has agreements for investment promotion/protection with 13 countries of EU. Similarly, agreements for avoidance of double taxation exist with 14 countries in EU. There are other cooperation programmes such as Indo-German Export Promotion Programme, Indo-British Partnership Initiative and different economic cooperation programmes with European Commission. These agreements provide a permanent platform for constant review of bilateral economic and commercial relations.