PM fails to achieve breakthrough on Indo-German FTA

Prime Minister Manmohan Singh's European tour to drum up business has resulted in a joint Indo-German statement that the two nations have made ''progress'' in talks on a free-trade agreement, but without any immediate outcome.

German criticism of high Indian import taxes on cars has loomed large in the negotiations, begun in 2007 with the European Union.

''There have been some problems with the level of tariff protection we give to India's automobile sector,'' Prime Minister Manmohan Singh said. ''We had a thorough discussion of this issue, and I hope when the ministers meet later this week in Brussels, other progress can also be registered.''

Singh's German counterpart Chancellor Angela Merkel said the two countries ''have at least made a step towards one another'' on car tariffs, ''but we have not quite got to where each country expects to be.''

Merkel added that ''an agreement'' in the automobile sector seems achievable, but ''we have not overcome all the problems yet''.

The European Union has also raised the usual objection to Indian restrictions on foreign ownership of insurance and service companies. Prime Minister Singh said his government supports liberalisation of insurance, but any such legislation requires parliamentary approval.

Singh was accorded a red-carpet welcome this morning outside Merkel's office. But the honour was a mere bow to the Indian love of protocol - the Indian Prime Minister had already had dinner with the German Chancellor the previous evening.

A free trade agreement was the principal topic on Singh's agenda in Berlin. Germany is India's principal EU trading partner with a volume of €18.4 billion in two-way trade in 2011.

Manmohan Singh and the German chancellor were speaking after a meeting of their key cabinet members that sought to boost trade and investment ties between Europe's biggest economy and the South Asian population giant.

The prime minister said the two had discussed the debt woes and recession that have hit members of the 17-nation currency union.

"We want the Eurozone to prosper and get out of this atmosphere of crisis because the Euurozone countries are a most important component of the development of the global economy," the Indian Prime Minister said.