India-UK trade pact far from reality, fund set up for clean energy projects

Nayanima Basu New Delhi | Updated on January 15, 2018 Published on April 04, 2017

Finance Minister Arun Jaitley has said that India is keen on investing in UK as he would also like to see more investments coming in from there even as he stressed that a free trade agreement (FTA) between both countries can only happen post Britain’s formal departure from the European Union (EU).

Jaitley said this post his meeting with British Chancellor Philip Hammond, who is on a two-day visit to India to participate in the ninth UK-India Economic and Financial Dialogue (EFD). Hammond’s visit to India comes in less than a week since British Prime Minister Theresa May triggered Article 50 of the Lisbon Treaty to formally initiate the process of Britain leaving the EU, popularly called Brexit.

“We will look at it (FTA), more trade arrangements and engagement between two countries post UK’s exit from EU,” Jailtey said after the UK-India EFD.

Both sides also agreed to jointly set up a fund worth 240 million pounds to finance clean energy projects in India. This will be known as the Green Growth Equity Fund, which will be sub-fund of National Investment and Infrastructure Fund (NIIF).

Both governments reaffirmed their commitment to anchor invest up to £120 million each in the joint fund with a target to raise it to around £500 million.

“This is a relationship between equals. We share a common legal system and a common language of business. India is a major investor in UK and UK is one of the top investors here,” Hammond said.

The joint UK-India fund aims to leverage private sector investment from the City of London to finance India’s infrastructure projects, the statement said.

According to experts, UK has no other alternative but to rely on India in order to address the skill shortage it has, the need for which will increase once Britain leaves EU. As a result, UK will be compelled to ease some of the restrictions it has imposed on work permits.

“India has been one of the largest contributors of skilled labour with doctors, scientists, engineers and IT specialists filling the vital market gap here and helping the country run … With a market of over a billion people, and as the fastest growing economy in the world, India holds pivotal importance for Britain to establish a bilateral trading agreement,” said Sarosh Zaiwalla, Founder and Senior Partner of UK-based Zaiwalla & Co. Solicitors.

Hammond, who will be visiting Mumbai on Wednesday for a conference on India-UK financial technology summit, is accompanied by leaders from UK FinTech and financial services firms, as well as FinTech envoy Eileen Burbidge, the Commercial Secretary Baroness Neville-Rolfe and International Trade Minister Mark Garnier.

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Published on April 04, 2017
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