How the UK and India can reach a fruitful free trade agreement

As the fifth and sixth biggest economies in the world, this matters. The ETP is a potential game-changer for businesses and consumers, for it could double bilateral trade to £50 billion per year by 2030. Both governments should be congratulated on getting it to this stage.

UK-India trade is already strong: in the year before the pandemic, bilateral trade grew by 10% to £24 billion. The ETP and FTA will help grow this rapidly, particularly in sectors such as food and drink, life science and healthcare, advanced engineering, energy, digital technology, defence, education, and legal, financial and professional services.

Indeed, on launching the ETP, the UK’s secretary of state for international trade, Liz Truss, and India’s minister of commerce and industry, Piyush Goyal, announced that non-tariff barriers on fruit and medical devices will be lowered. There was also a commitment to deepen cooperation in educational services including the mutual recognition of higher education qualifications, which will help Indian students study and work more fluidly between the UK and India. A pledge to work to remove barriers to enable deeper legal services collaboration is another step that could significantly increase trade and grow both economies.

It is also hugely encouraging that lowering or removing current tariffs such as those of up to 150% on whisky and on getting greater access to the UK for Indian textile and handicraft exporters have been highlighted as objectives of the ETP.

There are three elements of the ETP that I particularly like.

First, it addresses market access and regulatory issues on an immediate and ongoing basis. Removing barriers one by one, and not working on the basis that nothing is agreed until everything is agreed. Working in this pragmatic way, issue by issue, win by win, will build the confidence and momentum that will be vital to secure a comprehensive FTA.

It is also welcome that the ETP is future-proofed. Alongside growth in goods trade, we expect significant growth in services trade. Particularly the technology, digital, financial, and IP-rich services where the UK and India are globally competitive and where there is scope for far greater bilateral activity. By focusing, now, on the trade of the future, the UK-India ETP and FTA can be a model for all trade deals that follow.

The third element of the announcements that caught my eye is the assertive timetable, with both governments committing to completing their pre-negotiation scoping by the end of this year. Indeed, the UK government has already launched its business consultation at the end of May. The ball is very much rolling.

The consultation, launched by Truss, will gather the views of businesses in the UK over a period of 14 weeks ahead of FTA negotiations that could start as early as autumn 2021.

An FTA, starting with the ETP, would make it easier for businesses in both countries to access two growing markets and two sets of highly educated, skilled populations, bound together by ambition. That can only be a good thing for consumers, too, who will be able to buy a wider range of products and services at lower costs, and for society at large, as we are always stronger working together.

In my view, business and government working together is going to be essential. We must work together on immediate issues, such as supporting India to develop its data regulations, which will be crucial in expanding digital trade between the two nations. And we must also work together on pre-FTA scope-defining exercises.

We’ve seen the benefits of business-government (B2G) partnerships in areas such as combatting covid and climate change. And I’m sure that a B2G dialogue will help ensure that the ETP and FTA produce the right outcomes for both countries.

Kevin McCole is managing director, UK India Business Council