FILE PHOTO: Piyush Goyal, Minister of Railways and Coal of India, gestures as he speaks during the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2018. REUTERS/Denis Balibouse

NEW DELHI (Reuters) - India should hold talks with the European Union for a free trade agreement, the government said on Tuesday, a day after it refused to join a China-backed regional trade pact 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 finalize an agreement.

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

Goyal said India had put forward “strong demands” on services, investments leading to the prolonged negotiations for the RCEP, which includes the 10-member Association of Southeast Asian Nations (ASEAN), Japan, South Korea, Australia and New Zealand, besides China.