In the early 1990s India was a closed market and it has gone a long way since then to become an important player in the international trade scene. The country is one of the fastest growing economies in the world with a growth rate of 8-10%. This rate in combination with the large market in India makes it a desirable trade partner for many other countries. The European Union, for example, is looking to establish a Free Trade Agreement with India - negotiations started in 2007 and the agreement is expected to be finalized by the end of this year according to EU trade commissioner Karel De Gucht.
Trade between the EU and India has grown immensely in the past decade. For example, in 2003 trade amounted to about 28.6 billion euro, whereas in 2007 it was 55 billion euro, as reported by the European Trade Commission. The nations from the European Union recognize the benefits of India's rapid growth and high market protection. Therefore, they aim to realize the full potential of trade with India by establishing an FTA. A free trade agreement will reduce the amount of trade tariffs India imposes.
One big issue that the countries are negotiating is the fact that patent laws in India are not as strongly enforced as in the EU. Since pharmaceuticals are one of EU's largest exports, the EU is insisting that India firms up its patent regime. India is home to a multibillion-dollar pharmaceutical industry because it specializes in making "generics" - copies of popular drugs for a much cheaper price. This hurts the chances of European companies to make profits in India. The Indian trade minister has agreed to strengthen patent laws in the country.
A trade agreement between India and the EU will generate more revenues for both regions and will also increase the amount of trade due to reduction of trade barriers. Overall, if patent issues are worked out, the trade agreement will prove to be beneficial.