EU terms some Indian policies as protectionist

New Delhi: Amid concerns being expressed over growing protectionism, the European Union on Thursday said it has taken up the issue of mandatory sourcing of equipment in telecom sector from local industry with the Indian government.

"Yes, there have been correspondence between trade commissioners (of India and EU on all the issues) ... wrote to Telecom Minister Kapil Sibal on the issue of domestic content...," EU's Head of delegation to India Joao Cravinho said when asked whether EU has raised these issues with India.

Terming some of the recent steps taken by the Indian government like banning of cotton export as protectionist, Cravinho said that liberalised trade was essential to stimulate growth in times of global economic uncertainty.

"...it is worried when we see Russia or China and also India (taking) protectionist measures. Some measures are worrying like rise in car tariffs in the recent budget, questions on cotton exports, questions relating to domestic content in manufacturing telecom equipment," he told reporters.

He said that EU is committed for trade liberalisation as it would help in stimulating economic growth.

"Use this opportunity to actually reduce trade barriers as a way to help ourselves. It is something which all will benefit from," he added.

In Los Cabos, the G-20 leaders have asked the member nations and other countries to resist protectionism and keep markets open.

In February, Indian government has approved a proposal that electronic products having minimum 25 per cent content from India should be given preference in government procurement in the first year.

The government in March had lifted ban on cotton exports under immense political pressure, within days of prohibiting shipments of the natural fibre.

"...things are not yet entirely stabilised...it is (these moves) is a closing market rather than opening," Cravinho said.

When asked about the issue of retrospective amendment of income tax laws, he said the EU wrote a letter to the Finance Minister on the matter but has not received any response till yet.

"...we are concerned about uncertainties...EU is looking up at this matter," he added.

With an aim to bring off-shore transactions like of Vodafone-Hutchison, involving Indian assets the government has amended the Income Tax Act with retrospective effect.

He said that there are some companies who are directly or indirectly affected by this development.