The leaders of Germany and India said Thursday that progress is being made on a new free trade agreement between India and the European Union but cautioned that there is still work to be done.
Negotiations have been ongoing for six years and officials had hoped to conclude the agreement by the end of 2012. But the agreement has been hung up over a wide range of issues, including EU demands for intellectual property protections and investor guarantees, as well as import duties on automobiles.
The EU is already India's largest trade partner and the Indian economy is growing robustly, leading German and other European businesses to increasingly look there for new opportunities. India, meantime, is eager for greater integration in global markets as its economic power expands.
Speaking after a joint meeting of their governments, Chancellor Angela Merkel and Prime Minister Manmohan Singh said they were optimistic the agreement could be concluded soon.
Germany, one of the world's largest exporters and home to several large automakers including Volkswagen, Daimler and BMW, has been in particular worried about import duties on cars and other vehicles.
Merkel said "a balanced treatment of the automobile industry is important" before the deal can be signed. "I think we came a step closer today but there are still different expectations on both sides that we need to overcome," she said.
Merkel suggested in general, however, both sides were willing to make compromises, saying "we cannot expect every country to eagerly accept all of the wishes Germany might have," while adding that she also has "the feeling there is a great readiness to be forthcoming on India's part."
Singh said the two leaders had a "very thorough discussion" of the automobile issue. He said he hoped that meetings between both sides later this week in Brussels would produce further progress.
Regarding wider EU concerns on insurance sector restrictions, Singh said his Cabinet has proposed raising the permitted foreign shareholdings from 26 percent to 49 percent but said the measure still needs parliament's approval.
In other comments, Singh praised Merkel's "insight and commitment" in her handling of the Eurozone's financial woes, saying it "gives me confidence that Europe's crisis atmosphere will be tackled in the months to come."
"We would like a strong Eurozone," he said. "It is in the interest of all developing countries."