Economy

India, UK launch negotiations for free trade pact

Our Bureau | | Updated on: Jan 13, 2022
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Goyal, Trevelyan set year-end deadline for pact; interim deal may conclude sooner

India and the UK have launched the negotiations for a bilateral free trade agreement (FTA) covering a multitude of areas including goods, services, and investments, and have set a year-end deadline for concluding the pact.

Commerce & Industry Minister Piyush Goyal and UK International Trade Secretary Anne-Marie Trevelyan, in a bilateral meeting in New Delhi on Thursday, endorsed the Terms of Reference for the negotiations and expressed hopes of finalising an interim deal comprising a limited number of items within a few months.

“We are happy to look at an interim agreement in the months ahead. We are all aiming to achieve a broad FTA in the course of this year,” Trevelyan said at a press briefing after the meeting of the India-UK Joint Economic and Trade Committee (JETCO).

The India-UK FTA seeks to double bilateral trade in goods and services from existing $50 billion to $100 billion by 2030.

“We are deeply entwined through close bond of friendship, kinship and commerce,” Trevelyan said, adding that the FTA gave the two countries a golden opportunity for forge a new economic partnership recalibrating ties in areas of trade, defence, climate and health.

The negotiating teams will regularly engage with each other on the FTA to deliberate on different aspects of the relationship and fast tracking an early harvest agreement to capture the low hanging fruits, Goyal said. Although Goyal and Trevelyan did not specify a deadline for the early harvest package, Commerce Secretary BVR Subrahmanyam later said at a media briefing that it could be ready by Easter, which falls in April.

The FTA is important for India as the country is not part of any major free trade deal and was losing out to competitors such as Vietnam, Myanmar and Bangladesh in some sectors, the secretary said.

Goyal pointed out that there were areas where giving more market access would not be too difficult. For instance, India could export more textiles to the UK without causing detriment to its local industry as the country already imported a lot of textiles. Similarly, items like high-end machineries and modern equipment, where India is a large importer, offer business opportunity for the UK.

India also hopes to gain greater market access for items such as leather, gems & jewellery, pharmaceuticals, marine products and engineering goods and more liberal visa norms for its workers and professionals. The UK is keen on lower tariffs for its Scotch Whiskey and automobiles.

Subrahmanyam said that India would remain cautious while negotiating market access for items such as agriculture and dairy, but since the UK was not majorly into such items, it would not be a significant challenge.

Elaborating on the FTA, the Commerce Secretary said the FTA will have 16 chapters which, apart from goods, services and investment, will include areas such as IPR, GI, sustainability, digital anti-corruption, competition and MSME. Agreements in many of these areas will, however, be only `best endeavours’ and not binding commitments.

 As Britain embarks on its important journey of forging significant trade ties after its exit from the EU, the India-UK FTA negotiations was an important engagement for it, the British Trade Secretary said.

UK was India’s fourteenth largest trading partner with bilateral trade valued at $13 billion taking place in 2020-21. While India exported goods worth $8.1 billion to the UK its imports were at $5 billion.

In May 2021, Prime Minister Narendra Modi and British PM Boris Johnson set the target of doubling bilateral trade by 2030 by following the ‘2030 Roadmap’.

Published on January 13, 2022

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