The Free Trade Agreement between India and the United Kingdom has been anticipated for a long time now and in a positive development in that direction, both countries are poised to put pen to paper by the end of this month, putting to rest all lingering issues, according to an official source.
UK’s Prime Minister Rishi Sunak’s visit to India has been scheduled for late October to seal this ambitious pact, which promises to stimulate bilateral trade in goods and services while boosting foreign direct investment. Sunak expressed eagerness to establish a “comprehensive and ambitious trade deal” when he last visited the G20’s Leaders’ Summit earlier last month. However, he also acknowledged that there was still some work to be done to ensure the agreement benefits both nations.
An informed source confirmed that all contentious matters within the proposed FTA have now been successfully resolved. However, the Bilateral Investment Treaty (BIT) will be addressed separately as consensus has not yet been reached. In the absence of a BIT, the India-UK Infrastructure Financing Bridge will address any bilateral investment concerns.
The FTA negotiations had encountered obstacles related to BIT, Rules of Origin, and intellectual property rights, with the demand for easier visas for professionals from India facing resistance from the UK.
The services sector’s issues have been resolved based on the model of the UK’s FTA with Australia, which came into effect in May 2023. This includes the UK’s demand for national treatment of its services businesses and greater freedom for its professionals to operate in India.
The FTA talks between India and the UK began in early 2021 and cover sectors such as financial services, business and professional services, transport services, and a liberalized visa regime for UK business travelers in India.
The FTA with the UK holds potential for India amid ongoing diplomatic tensions with Canada, which has impacted the movement of Indian professionals. India has suspended FTA negotiations with Canada.
In the fiscal year 2022-23, India’s merchandise exports to the UK increased by 9.03% year-on-year to reach $11.4 billion, with imports rising by 27% to $8.9 billion. FDI from the UK in FY23 stood at $1.7 billion, compared to $1.6 billion in the previous year. Key Indian exports to the UK include ready-made garments, gems and jewelry, engineering goods, and pharmaceuticals, while imports encompass precious stones, engineering goods, chemicals, and machinery.