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 Indian Prime Minister Narendra Modi's office wrote to the E.U. Trade
Commissioner to intervene when the ban on around 700 pharmaceutical
products was formalized in May, two government sources in New Delhi
said. There was no response, so the government canceled an Aug. 28
meeting to discuss restarting talks on the free trade accord that
stalled in 2012, the sources said.
The E.U. Trade Commission says it did not get the letter from Modi's
office on the ban, which is linked to flaws in clinical tests done
by India's GVK Biosciences for other companies to make sure generic
drugs are as good as the patented originals they emulate.
Coming after a trip to Germany where Modi personally argued that the
long-stalled talks on a free trade accord should be revived, India's
about-turn was a shock for the 28-nation grouping, which insisted
the ban was a minor, technical issue unconnected to trade.
India though, sees the move as veiled protectionism and support for
major European drug manufacturers.
"We are disappointed and concerned over the EU action in imposing a
ban on the sale of drugs," said Rajinder Chaudhary, spokesman of
India's Ministry of Commerce and Industry.
But both sides are working to end the row, officials said. The
European Union said in its May ruling against the India-made
pharmaceuticals that drug makers can avoid the ban by submitting
fresh test results.
"The Commission hopes that a solution will be found to the current
deferral," said Daniel Rosario, a spokesman at the European
Commission, adding that Europe was committed to reaching a trade
deal.
Privately, New Delhi expressed the same sentiment.
"It is not a permanent deferral," said a top Indian government
official with knowledge of the developments, asking not to be named
because of the sensitivity of the matter.
TOUGH TACTICS
India-made generic drugs have brought down the cost of medicines
globally, but they attract the ire of big U.S. and European
pharmaceutical firms who lobby their governments to stop what they
see as innovation-stifling attacks on their patents.
Indian officials have described the E.U. move as a part of an
offensive against its $15 billion generic drugs industry, as well as
bad faith by its top trading partner just when Modi had staked his
name to a revival of the long-stalled free trade deal.
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India has used tough tactics before in trade talks - soon after Modi
took office last year New Delhi came close to scuppering the first
ever global trade deal in order to win a concession from the WTO on
farm subsidies.
Some Indian officials, buoyed by the success at WTO, believe the
tactics can be repeated.
But the delays risk leaving India isolated. While Modi is trying to
double India's global exports to $900 billion in five years,
Europe's top negotiator now spends more time on the Transatlantic
Trade and Investment Partnership (TTIP) with Washington. Another
with Japan is in the works.
"It is better to try to raise these issues within talks than try to
resolve them outside," said Shyam Saran, an expert on global trade
and India's top diplomat when Modi's party was last in power.
"The European Union is very important, it is our largest trade
partner, given that negotiations are going on with TTIP, it is
better to have a FTA (free trade agreement) deal before that."
India's goods trade with Europe declined by about 4 percent in the
fiscal year 2014/15 to $98 billion, while trade in services slipped
2.5 percent to $26 billion in 2013.
But while the EU is India's largest trade partner, it ranks only
ninth among the bloc's partners, accounting for about two percent of
its total merchandise trade in 2014.
($1 = 0.9105 euros)
(Additional reporting by Julia Fioretti in Brussels and Frank Jack
Daniel in New Delhi; Editing by Raju Gopalakrishnan)
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