'Progress' on free trade deal at EU-India summit

EU and India leaders hope to finalise the free trade agreement soon

European Union and Indian leaders have made "substantial progress" towards a free trade agreement, says European Council President Herman Van Rompuy.

There is hope that a deal will be worked out at the "very earliest", said Indian Prime Minister Manmohan Singh.

The two sides were holding a summit in Delhi to strengthen bilateral trade.

Negotiations on a free trade agreement (FTA) have been taking place since 2008 with little success amid a number of tariff and visa issues.

The sides want to double trade from $107bn this year to $200bn in 2013.

Other issues at the summit have included energy co-operation and security concerns.

Iran concerns

Disagreements over matters such as Indian duties on cars and spirits and limited access for India to the European labour market have held up a free trade deal.

But European Commission President Jose Manuel Barroso said on Friday the agreement could be signed by the autumn and would be "the single biggest trade agreement in the world, benefiting 1.7 billion people".

Indian Commerce Minister Anand Sharma said the talks were in the "final stage" but a "few gaps" still remained.

The European Union is India's largest trading partner, accounting for 14% of India's foreign trade.

One major concern over a free trade deal is the issue of generic drug manufacture.

Critics such as Medecins Sans Frontieres fear the FTA could seriously harm India's production of generic drugs, which are sold to millions of patients at reduced prices in poorer countries.

The EU has suggested a clause "to ensure that nothing in the proposed agreement would limit India's freedom to produce and export lifesaving medicines".

Another key issue at the summit was Iran.

India has been defiant in maintaining trade ties, particularly on oil imports, despite a strengthening of trade sanctions by the West.

Mr Van Rompuy said he would share his "deep concern on the Iranian nuclear programme and will ask Prime Minister Singh to use India's leverage towards Iran to help bring Tehran back to the negotiating table".

Mr Singh said the problems with Iran's nuclear programme "should be resolved by giving maximum scope to diplomacy".