India's crackdown on black money will help financial system: EU

The European Union (EU) on Sunday welcomed India's decision to withdraw high-value banknotes in a bid to root out black money.

Ridding the system of ''black component" and bringing transparency will strengthen Indian economy and aid growth, the EU said.

Vice-president of European Commission Jyrki Katainen complimented the Indian government for its resolve to roll out the Goods and Services Tax (GST) along with other reform measures, PTI reported.

Katainen, who is on a visit to India over the EU-India Broad-based Trade and Investment Agreement (BTIA), said that the fight against tax dodgers will boost India's financial system.

"All the measures which will reduce black economy are always good for people and the financial system," he told PTI following the Indian government's decision to withdraw Rs 500 and 1,000 notes.

He called the GST a "very ambitious" and "very necessary" move to reform the tax structure in India and to boost investor confidence.

Investors from European countries are bringing "white clean money" to India he said.

The two-way commerce in goods between India and the EU was USD 98.5 billion in 2014-15, PTI reported. If the BTIA or the free trade agreement was finalised, European investments into India are set to increase manifold, Katainen said.

India's existing trade and investment agreement with The Netherlands will come to an end in two weeks and similar pacts with several other EU countries will expire in coming months making it difficult for the European corporates to make fresh investment in India, he stressed.

As per European Union law, no member country now can go for bilateral trade and investment pact with India as the grouping is in negotiations for an EU-India Broad-based Trade and Investment Agreement (BTIA), the PTI report stated.

India's trade and investment pact with 23 countries is likely to expire by the end of next year.

Launched in June 2007, negotiations over the proposed agreement have seen many hurdles but the EU has now shown an inclination to restart talks.

(WION with inputs from PTI)