EU banks can open 15 branches over four years under FTA with India

India has agreed to allow European Union (EU) banks to open 15 branches over four years under the free trade agreement, the commerce ministry said.

At present, European banks that operate in India include Deutsche Bank (Germany), BNP Paribas (France), and Societe Generale (France).

India and the European Union (EU) on Tuesday announced the conclusion of a free trade agreement (FTA). It is expected to be signed and implemented this year.


The country has also provided 100 per cent FDI (foreign direct investment) commitments in the insurance sector and 74 per cent for banking services, it said.

"India has provided market access for bank branches to the EU, that is, 15 branches over 4 years for EU banks," it said.

It also said that India has taken appropriate carve-outs for national security and also reserved policy space in sectors like legal services, thereby taking care of India-specific sensitivities.

Regarding rules of origin, the ministry said that to ensure only meaningful manufacturing or value-adding activities qualify for preferential tariffs, there is an "insufficient production or minimal operations and processes" clause in the agreement .

It specifies processes that do not confer origin status, even if performed in a member country (such as packaging, labelling, minor assembly, or peeling).

Further, in case there is a surge in imports into India from the EU on account of tariff liberalisation commitments under the trade deal, which can impact a domestic industry, the trade pact provides a bilateral safeguard mechanism.

Under the mechanism, India can enhance the rate of duty to MFN (most favoured nation) level on goods, which has resulted in a surge in imports from the EU due to tariff reduction or elimination under the trade deal.

"The maximum duration of bilateral safeguard measures cannot exceed four years. The measure can be initially applied for a period of two years, which can be extended by an additional period of two years upon a review investigation. In any case, the measure cannot exceed a period of four years," it said.

Further, it said that there is no obligation on India under the Intellectual Property Chapter in the India-EU trade deal that requires India to change or modify any of its intellectual property laws.

The trade deal provides for a general review by the joint committee within five years of its entry into force and thereafter every five years, or at such other times as may be agreed by the parties.