PremiumIndia and the UK will start active consultation this week to finalize a free trade agreement (FTA). UK secretary of state for international trade Anne-Marie Trevelyan and commerce minister Piyush Goyal are expected to discuss the removal of market access barriers. Mint explores:
India and the UK will start active consultation this week to finalize a free trade agreement (FTA). UK secretary of state for international trade Anne-Marie Trevelyan and commerce minister Piyush Goyal are expected to discuss the removal of market access barriers. Mint explores:
Why is the FTA important?
A deal will be critical for India at a time when the country has walked out of key FTAs such as the Regional Comprehensive Economic Partnership (RCEP) and begun to renegotiate others. India finds existing agreements to be not benefitting domestic industry. Imports had been rising over the past years and exports grew at a tepid pace. India has chalked out an aggressive Atmanirbhar Bharat plan which aims to make it an export powerhouse with $1 trillion exports by 2030. So fewer trade barriers with a large market like the UK could give a push to exporters.
What do the two countries want?
India wants enhanced mobility for its professionals and reduced fee for work and tourism visas, safeguards for agriculture, better market access for vaccines, basmati rice, wool, yarn, instant coffee, and tea pre-mix, among others. The UK, on the other hand, wants the ease of doing business, removal of tariffs of up to 150% on whisky and 125% on British-made cars. Also, removal of barriers to trade in services, food and drink, healthcare and medical devices. On the table is partnership on using green energy for industries and long-term academic collaborations between the two nations.
What’s the progress on other FTAs?
India is close to finalizing one FTA with the United Arab Emirates (UAE). Talks are at an advanced stage with Australia on an interim agreement. With the UK, the idea is to have an interim agreement by March this year. India is in negotiations with Israel and hopes to launch discussions with Canada on the same in two or three months.
What is Trevelyan’s agenda?
During the two-day visit to India, she will hold talks with Goyal on easing trade barriers while they may also confirm the launch of official talks on the new FTA. On Thursday, Trevelyan and Goyal are set to co-host the 15th UK-India Joint Economic and Trade Committee which will review how businesses in both countries are benefiting from existing market access commitments under the UK-India Enhanced Trade Partnership agreed last May by Prime Ministers Boris Johnson and Narendra Modi.
What about multilateral trade?
While India remains committed to trade multilaterism with the World Trade Organisation (WTO) at its centre, it has renewed its efforts to strike bilateral trade deals with key countries. It believes exports could be further strengthened through an extensive set of preferential trade agreements. More FTAs will give Indian products more access to global markets and the opportunity that India missed by staying out from the RCEP. More-over, with multilateral trade talks at WTO stalled, it only makes sense to be part of large bilateral deals.
