In its bid to eliminate trade barriers, gain access to preferential markets and eventually become one of the top manufacturing and logistics hubs in the world, India has been signing free trade agreements (FTA) with various countries. The Government of India has been working towards making India a developed nation in the next 25 years.
The most recent FTAs were with Australia and the UAE, which reduced EXIM tariffs to a great extent. With Boris Johnson’s visit to India earlier this year, it was speculated that the FTA between India and UK and EU will receive a much anticipated nod. After all, his visit marked completion of 4 of the proposed 26 negotiation chapters around the FTA which has been in talks since 2021.
In latest developments, the Minister for Trade and Commerce, Piyush Goyal, has said that both the countries are working towards putting pen to paper by Diwali this year, even though UK has been towards the lighter side of trade activity following the Queen’s demise. The 5 round of negotiation discussions concluded in July this year.
India’s FTA with UK may bargain a range of products and services from textiles to alcohol, automobiles, pharmaceuticals as well as subjects like labour movement, intellectual property enforcement and data protection.
“I think we have high ambition on completing the FTA by Diwali. The FTA will create more jobs, more growth, and more opportunities for India to grow and develop. FTA is one of the best ways we can support the growth and development of India’s economy and India’s employment over the next 25 years. Now is the time to write a new chapter in our history as partners and support each other in our growth.”Alex Ellis, British High Commissioner to India
Another Secretary at the Commerce Industry, BVR Subrahmanyam, had said earlier this year that the interim (early harvest agreement) aims to achieve up to 65% of coverage for goods and up to 40% coverage for services. By the time the final agreement is inked, the coverage for goods is expected to go up to “90 plus percentage” of goods, he added. Early harvest agreements are used to open up bilateral trade between two countries on a restricted list of goods and services, primarily as a frontrunner to clinching a more comprehensive FTA.
It is being said that India’s approach towards FTAs is to be fair and balanced, focusing more on collaboration and less on competition. However, it is easier said than done. Experts say that there is a requirement of a balanced approach towards trade, which means that even though foreign brands will be increasingly available in the Indian markets, their presence should not endanger the small/medium homegrown brands of various commodities.
India’s bilateral merchandise trade with the UK was worth USD 17.4 billion in 2021-22, higher than the previous record of USD 16.8 billion in 2018-19.