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India and the UK are set to announce launch of negotiations for a bilateral free trade agreement (FTA) when British International Trade Secretary Anne-Marie Trevelyan’s visits New Delhi later this week but there is no surety over whether the UK will also agree to an early harvest deal on select items, sources have said.
“India has been keen that an early harvest agreement, for liberalising tariffs and restrictions on certain identified items from both sides, should precede a full-fledged FTA. But the UK is not as enthusiastic about it as it has never done such an agreement. There will be clarity on this next week when the Ministerial-level meeting takes place,” a person tracking the matter told BusinessLine.
New Delhi favours an early harvest agreement as it can be concluded within a few months, while a comprehensive pact can take much longer. Items where India hopes to get enhanced market access in the UK include garments and textiles, leather products, rice, beverages and tea & coffee. The UK is interested in lower tariffs on Scotch whiskey and automobiles, among other things. In services, India wants easier work visas for its professionals and other workers.
The UK is also focused on removal of non-tariff barriers to trade in India, as it believes that such measures applied by India outnumber those applied by the country. According to an information note compiled by the UK Department for International Trade (DIT) last year, India applies 193 technical barriers to trade and 236 sanitary and phytosanitary restrictions to trade.
Trade agenda
Trevelyan, in her two-day visit beginning Wednesday, will hold bilateral talks with her counterpart Piyush Goyal discussing multiple issues, including green (environment friendly) trade and the removal of market access barriers for both UK and Indian businesses, the DIT, UK said. She will also co-host the 15th UK-India Joint Economic and Trade Committee (JETCO) with Goyal and review the UK-India Enhanced Trade Partnership agreed to by Prime Minister Narendra Modi and British PM Boris Johnson last May.
“I will be using my visit to drive forward an ambitious trade agenda which represents the UK’s Indo-Pacific tilt in action and shows how we are seizing global opportunities as an independent trading nation,” Trevelyan said in a statement on Sunday.
The UK is interested in an FTA with India as it seeks to enhance trade ties with prominent countries following its exit from the European Union. India, on the other hand, is looking at free trade pacts with economies that are outside the influence of China, as it does not want the country to route its goods into India through its FTA partners.
India’s exports to the UK in 2020-21 were at $8.15 billion and imports were at $4.95 billion.
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