With Manmohan Singh pushing for speedy conclusion of the setting up of free trade agreement (FTA) between India and European Union, questions need to be raised on how this development might affect lives in India. Superficially, it might appear to boost trade and investment, with increasing pressure on India to reduce import duty on European cars and other goods. Though, this might look set to woo the growing demands of the aspiring classes, the domestic automobile industry is set to take a hit, in case drastic reductions on import duties come into effect. Not only will this flood the Indian market with surplus European vehicles, but also be a brutal blow to our indigenous car industry, that is doing alright present, catering to low and middle level demand for cars. Presently, only high end and luxury cars are imported from Europe, with completely built units, which are usually purchased by the well-heeled and affluent social strata. However, not will the FTA open the floodgates of low and middle-level European cars, but also will drive companies to cheaply get their cars manufactured in India, and sell them back to us at inflated prices. Lowering import barriers therefore would drastically impact domestic manufacturing and assemblage, as European behemoths will buy off the smaller companies at really low prices, therefore driving out competition.
In addition to the automobile industry, generic Indian pharmaceutical companies will also be affected negatively, particularly those making cheaper versions of super-priced cancer and HIV-AIDS drugs, in order to meet the rising demand for these life-saving medicines. India is also a manufacturer as well as global exporter of these generic drugs, and the recent Supreme Court judgment refusing Novartis AG’s claim for patent on Glivec, is indicative of the wide-scale movement against the worldwide scrambles orchestrated by big pharmaceutical companies like the Swiss giant itself. However, the FTA with EU has the potential for giving a free hand to a number of these Western pharmaceutical companies, who not only are likely to dump their surplus stocks on to the Indian market at extremely high prices, but also to use Indian patients as guinea pigs to experiment on their drugs and bring in so-called ‘innovations.’ Thus millions of poor people will be turned away as hospitals and pharmacies will be stacked with the over-priced drugs from the West, and even what gets prescribed for life-threatening diseases will be determined by the big pharma lobby as it flexes its financial muscles. Giving legal provisions to such menacing scenario in medicine and the health sector will mean that millions of poor patients will die owing to lack of adequate care and life-saving medicines. EU will, of course, try its best to make way to meet its industry’s demands, which is desperately looking at Indian markets, pressing for more demands on patent extensions and data exclusivity.