Euro might simplify trade but EU's rigid laws are a deterrent
AS Europe wrangles over the Euro, analysts can only theorise about what a single European currency might mean for India. Desk Officer for India at the European Commission in Brussels, Adrian Taylor, is optimistic that Europe from 1999 will be a much easier place for Indians to do business in.
"Being even stronger than the Deutsche Mark, the Euro will not fluctuate like the US Dollar, and stability means that you can have a guarantee as to what the price of European commodities might be even one year from the time you think of buying them." Taylor, in his enthusiasm, predicts that one day in the future the Euro will replace the US dollar, the most commonly used international currency, just as the sterling was supplanted by the dollar so many years ago.
"Things like the price of oil, which is paid for by India in US dollars in the international market at present, will not yo-yo as much as it does now," he said. But Indian analysts are less confident. "Even strong currencies like the Swiss Franc can fluctuate--and after all we will still have the Japanese Yen and the US Dollar which lie outside the European Union. Ultimately it is the market that will decide," said one analyst.
But both Indian and European analysts agree that a single currency will simplify trade. "There will be an automatic reduction in the number of currencies that Indian traders would have to cope with, and we believe that it will make exchange rates no longer a factor in trade arrangements between us," said the ambassador of the delegation of the European Commission in India, Michael McGeevet. Europe is India's number one trading partner with two-way trade at $22.52 billion in 1995.
Within the EU, Germany, the UK, Belgium, France and Italy all do brisk trade with India. And while Europe has stated that it wishes to encourage more Indian business, stringent immigration laws are a major disincentive for the ever-increasing Indian middle class. "Indians have brought up the subject of easing restriction on students, software experts and businessmen before," admitted Taylor, "but we are nowhere near close to making things easier. Anything that is connected to economics and trade is a relatively simple decision. But getting unanimity on social issues and matters related to justice is much, much more difficult."