NEW DELHI (REUTERS) - India should hold talks with the European Union for a free trade agreement, the government said on Tuesday (Nov 5), a day after it refused to join a regional trade pact led by Asean for fear of a flood of cheap Chinese imports.

Trade Minister Piyush Goyal said sectors such as gems, textiles and agriculture have pushed for a trade pact with the EU. German Chancellor Angela Merkel has also called for talks to restart to finalise an agreement.

"We should engage in an FTA with the EU," Goyal told a news conference where he explained the reasons for not joining the Regional Comprehensive Economic Partnership (RCEP) that 15 nations concluded on Monday.

Goyal said India had put forward "strong demands" on services and investments, leading to the prolonged negotiations for the RCEP, which includes the 10-member Asean, China, Japan, South Korea, Australia and New Zealand.