Commerce ministry sources, when contacted, said India felt that differences between both the parties continued to persist on indigenisation norms in New Delhi's automobile policy.

As for SAD, imposed during the 1998-99 budget, India told the EU that such a levy was permissible in lieu of sales tax under the General Agreement on Trade and Tariffs (GATT), which is the basis for World Trade Organisation (WTO) pact. "We don't think they (EC) like to progress on the matter (of SAD)," sources, who did not wish to be identified, said.

Besides SAD and automobile policy, India and EU held negotiations on a range of subjects, including new components for the next round of discussions at WTO.

The formal talks were held close on the heels ofinformal discussions between both the parties here from November 18-30 last.

Asked about the outcome of the talks, sources said the talks were only a process of negotiations.

India held negotiations with the EC as part of dispute settlement understanding, which encourages bilateral talks to narrow down differences, sources said.

On the automobile policy, they said India had defended the policy on balance of payment (BoP) grounds and argued that it was permissible under GATT.

"We feel they have differences and they seem to have the records," sources said, adding EC could ask for a settlement by WTO's dispute settlement body if it wished. "We hope they will not (ask for setting up the dispute settlement panel)," they said.

During informal talks in New Delhi, EC (WTO affairs) director Herve Jouanjean said the commission would move the dispute settlement panel `quickly' if formal talks with India on the auto policy failed. India's automobile policy requires joint venture and foreign car-makers toachieve 50 per cent indigenisation in three years and 70 per cent indigenisation in five years. It also requires them to invest $ 50 million before signing a memorandum of understanding with government besides making it mandatory to export for offsetting the foreign exchange outgo through automobile kits import.

While EC has termed it "discriminatory", India has justified saying it could be imposed on BoP grounds as in the case of import curbs on other items.

India and EC had also dicussed subjects for the next round of WTO negotiations, sources said. During the informal talks, India had said it would not be appropriate to introduce comprehensive WTO regimes in these spheres.

EC had raised issues like competition, investment, tariff and trade facilitation but India said it had some reservations about the broad agenda.

Besides, India on its part raised the issue of frequent anti-dumping proceedings initiated by EC, especially against imports of cotton goods.