Brexit may speed up India-UK free trade pact

India Inc is hopeful that Britain’s exit from the European Union (EU) will enable India to enter into a free trade agreement (FTA) with that country more easily.

As both countries share a number of complementarities and there are lower sensitivities, entering into an FTA with Britain will now be faster than with the entire bloc.

“Sectors such as automobile will not be as sensitive in an FTA with the UK as with the EU because the UK is not into manufacturing of too many small cars. Similarly, products such as textile from India could gain easier access to the UK,” CII President Naushad Forbes told BusinessLine .

He, however, added that India should continue pushing for the FTA talks with the EU as the region was important for the Indian industry. On whether Brexit would adversely affect Indian investments, Forbes said that investments made in the UK for items sold in the EU could get affected as uncertainty prevailed over the terms on which such business would be done. “But that is a very small portion of India’s business with the UK and the EU,” he said.

Commenting on the RBI Governor Raghuram Rajan’s term coming to an end in September, the CII chief said that the government should name a strong successor soon.

He said that Rajan’s exit would not have any negative fall-out on the Indian economy as a single person could not have an effect on a big economy like India’s.

Forbes said the recent changes made in India’s Foreign Direct Investment (FDI) policy will attract more investments into the country, and the only thing that still needed to be done was make the investment flow automatic in areas where it was still mandated through the government approval route.

In areas such as legal services, too, the government needed to open up and allow FDI to come in, he added.

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