India and Italy will set up a Joint Working Group (JWG) to boost the bilateral relationship in the pharmaceutical sector as both countries have identified pharma as a key area for collaboration in the coming times.

The modalities for forming the working group were being worked out and  Commerce Ministry is in the process of gathering inputs from the Pharmaceutical Department which in turn has sought views of the stakeholders including pharmaceutical associations about the nature, scope, and structure of the proposed working group, sources said.

The decision to create the JWG was taken at a meeting between Union Commerce Minister Anand Sharma with Italian Minister for Economic Development Paolo Romani and Italian Minister for Foreign Affairs Franco Frattni some time back.

Italy is one of the key destinations for Indian pharmaceutical industry. Though ranked 20 as a leading export destination for pharma, industry and political leaders on both the sides view Italy as a major port of entry to the European market.

The growth rate of pharma exports from India to Italy in the recent past has been below 10 per cent and the joint working group, once formed, would chalk out ways to boost the exports through closer cooperation, sources said.

India already has formed a couple of JWGs with Italy in the other sectors. Both the countries have emphasised the need to move forward and begin negotiations for a trade and investment agreement, as per the decisions in the past summits.

Besides, India is already in talks with the European Union to finalise a free trade agreement, which is expected to be signed sometime this year itself. But India and Italy held that the proposed FTA should strictly be for trade and investment and extraneous elements should not be brought into the pact.

Italy is India's fourth largest trading partner in the EU and bilateral trade has shown a robust growth of about 20 per cent for the past two years. Sectors identified for enhanced cooperation include leather, agro-food, gems and jewellery, auto components, textiles and garments, apart from pharmaceuticals. The trade between India and Italy is set to reach $17.5 billion by 2014.