* Merkel reports more progress "than for many years"
* Car import tariffs, foreign investment caps are key issues
By Stephen Brown
BERLIN, April 11 (Reuters) - Indian Prime Minister Manmohan
Singh and Germany's Angela Merkel said on Thursday they had made
progress on breaking an impasse in free trade talks between
India and Europe that have stumbled on access to India's car and
"The situation is that such a deal appears to be reachable,"
Merkel told a news conference with Singh in Berlin after talks
that included members of both of their cabinets.
"We haven't yet overcome the problems but I want to thank
India for its high degree of flexibility on certain issues, on
which we have got further today than for many years," she said.
Merkel went on to describe the negotiations as "dynamic".
Talks between the EU and Asia's third largest economy have
been dragging on for years. Reducing Indian car import tariffs
and caps on foreign investment in insurance are both of major
interest to Germany, India's biggest trading partner in Europe.
"We agreed on the importance of the early conclusion of a
broad-based Indian-EU trade and investment deal," said Singh.
"There are some problems with the level of tariff protection
we give to India's automobile sector," said Singh, adding that
trade ministers meeting in Brussels later this week should be
able to show further progress.
Singh also said his cabinet had approved an increase in
foreign participation in insurance firms to 49 percent from the
current 26 percent, which now had to be approved by parliament.
German business complains that the trade relationship lacks
the dynamism of that with China, despite Delhi's democratic
credentials - to the point that one German official has called
India a "sleeping giant".
Such frustration stems partly from disappointment that India
chose France's Dassault Aviation for an order of 126
fighter jets worth $10 billion in January 2012, over a bid from
Eurofighter backed by Germany, Britain and Italy.
Germany was lead negotiator for the Eurofighter consortium
of BAE, Finmeccanica and EADS. With
the French contract bogged down in a cost dispute, Eurofighter
says it is still in the race but Berlin played down expectations
that Thursday's talks with India could see another push.
Singh also said he told Merkel of "our resolve to restore
India's own growth to our long-term trend of 7.5 to 8 percent
per annum". Indian growth slowed to an estimated 5 percent in
the 2012/13 fiscal year - still a level that Europe, and even
its biggest economy Germany, can only dream of at present.
Singh, 80, an economist by training, said higher growth
rates would help fight poverty as long as New Delhi ensured that
the benefits were distributed fairly, adding: "Particularly our
women deserve a better deal."
He described the gang rape of a young student on a Delhi bus
in December as a "ghastly crime" but said Indian democracy and
the government had reacted quickly and effectively.
"You have my assurance that India is an open book, India is
an open society, committed to all the rules of a strong
democracy," he said.
Merkel said she raised the issue of women's rights with
Singh, adding that Germany was focused on bilateral development
programmes that would help India transform "from an agrarian
country with certain traditions". She did not elaborate.
"Germany wants to be a good, certainly critical, but also
helpful partner in such questions," Merkel said.
(Additional reporting by Andreas Rinke, Editing by Gareth Jones
and Mark Heinrich)