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EU to ease visa rules if India opens its market

The European Union is ready to ease visa rules for professionals if India agrees to open up more of its sectors and markets as part of a proposed free-trade agreement the two sides hope to sign early next year.

While all 27 EU member states have approved liberalised visa norms for professionals, the Indian government could also allow entry to legal and accountancy pros, a commerce department official told ET, adding that New Delhi is open to lowering duties on costly spirits and automobiles as well.

Chief negotiators from both sides are meeting next month in Brussels to finalise the agreement, scheduled to be signed during the India-EU summit in February. The EU is India's largest regional trading partner, accounting for $90 billion of trade in 2010-11, equally balanced between the two sides. European countries are also ready to do away with the contentious "labour market test" and take on individual commitments for increased visas for various categories of Indian professionals.

"The labour market test is an inhibiting clause that disincentivises hiring of foreign professionals," said Arpita Mukherjee, professor, Icrier. Most EU countries give out work permits to foreigners only after ensuring that their own labour do not get left out. Employers in the EU have to advertise for a job locally for a specified amount of time before a foreign worker is allowed to fill up the post.

Although some exceptions to the labour market test have been made for some highly skilled sectors in a few countries, it is mostly applied across sectors. For India, the big-ticket beneficiaries of the visa relaxation rule would be the information technology and the IT-enabled services sectors, the official said.

Other gainers would include structural engineers, medical support services, architects, accountants and teachers. Commitment on a minimum number of visas to be issued by EU countries annually could cut both ways, said an expert in services trade at a Delhi-based research organisation. "Since it would be a kind of quota, we have to make sure that the commitment that we are getting is more than what is anyway allowed in these countries," he said.

The commitment would be for both contractual service suppliers who visit a foreign country to fulfill a work contract as well as individual professionals. India's demand for free movement of professionals is known as Mode 4 in technical parlance while the EU, in return, wants greater openings in Mode 3, which means setting up of commercial presence. It wants professionals in sectors such as legal and accountancy to be allowed to set up practice in India.

"There is a possibility of allowing legal professionals in some corporate segments, but it is being opposed big-time by large legal firms," the official said. The EU also wants commitments for allowing investments in both single brand and multibrand retail.

"While the decision on allowing foreign investment in multi-brand retail or further easing in single brand will be applicable to all countries, the EU wants us to take on commitments in these so that the rules are not changed later," the official said.

While India is open to slashing duties on high-end spirits such as Scotch, it wants to protect cheaper products like local wines. The government may also lower duties on automobiles, but the cuts are not expected to be very sharp.
Published date : 03 Jan 2012 04:01PM

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