The recommendation that bothers the Europeans the most deals with tax concessions for importers who use Indian shipping companies to transport their cargo. "This is a retrograde step. It is obviously at the instance of a few vested interests who hope to benefit from this idea and escape competition," alleged Wolfgang Elsner, head of the transportation unit in the European Commission (EC). "This will be extremely harmful for the rest of the economy as it could push up the freight charges," he claimed. "It, in turn, will make Indian exports more expensive and uncompetitive. It will also make the costs of imports more expensive and hurt the Indian economy."The current low freight rates prevailing all over the globe have helped trade grow at a rapid rate. They have also increasedprofitability and the productivity of the entire economy, he said.

Elsner alleged the proposals, as they stand now, were against the principle of competition and the process of market liberalisation that India has been undertaking for the past several years. He said Indian shipping companies would stand to gain from a free market as it would make them more competitive and thus prepare them for gaining marketshare in the global shipping business.

"Today European shipping companies account for a very small marketshare in the home market, but that does not mean they are small or weak. They are global and hence do not depend upon the protection of the home market for their survival. With time, even the Indian shippers can reach the same position where they do not have to depend upon the government policies for their survival," he claimed.

The Europeans are also disturbed by the practice of Indian ports of charging different rates for Indian and foreign ships. "Even our shipping companies would not want theEU governments to frame rules that discriminate in their favour against foreign shipping lines," Elsner claimed. markets.....(and) we believe that even in the Indian ports this differential rate system is on its way out," he added.

These topics could have a significant impact on the bilateral maritime agreement proposed by the EU last year. The two sides have agreed to set up a working group on the issue under the Indo-EU joint commission. The Indian government has indicated its willingness to enter into such a bilateral agreement. The Surface Transport Ministry is currently reportedly discussing various aspects of the agreement with other ministries.

The first meeting to discuss details of the agreement is expected to be held within the next few weeks, with each side bringing to the table issues most important to it. The agreement will supercede all the separate bilateral maritime agreements that the EU member states have with India.

--India Abroad News Service