Formal negotiations on India-UK FTA to start after domestic consultations conclude

Formal negotiations between the UK and India on the proposed Free Trade Agreement (FTA) will not begin immediately as both countries will spend the next few months to gather inputs from all stakeholders including businesses, consumers and concerned Ministries and Departments, sources have said.

UK International Trade Secretary Liz Truss has already started the consultation process for the proposed FTA with the industry and consumers in her country this week while the Commerce & Industry Ministry in India, too, has begun internal discussions on the scope of the agreement and is looking at fast-tracking stakeholder talks, a source tracking the matter told BusinessLine .

The consultation process in the UK will go on for the next 14weeks, per reports.

“Both India and the UK will hold talks with stakeholders in their countries to find out what the general expectation from the pact is. Formal negotiations may, therefore, begin in October or later as the governments would need time both to collect and assimilate inputs in a way that these get woven into the negotiations. Although the major demands from both countries are known, the inputs from stakeholders will help the negotiators in deciding their strategies based on priority,” the source said.

Import duties cut

For instance, the UK is keen on reduction of import duties on cars in India, which ranges between 60 per cent and 100 per cent, as well as wines and spirits with import duties between 100 per cent and 150 per cent. It also wants more access in services such as legal and financial including banking and insurance.

India, on the other hand, wants more visas for students and professionals and lower duties on items such as textiles, garments and leather.

“Both sides have to weigh how much they are willing to sacrifice in terms of market access based on what they expect to gain from a concession that they are demanding,” the source said.

The UK is interested in an FTA with India as it seeks to consolidate its relationship with major trade partners after stepping out of the EU while New Delhi wants trade deals that are completely outside Chinese influence.

The voice of business will be crucial to successful trade negotiations and so the launch of the pre-FTA business consultation is most welcome, said UKIBC Chair Richard Heald in an official release. “Businesses are enthusiastic about the opportunities presented by the possibility of a comprehensive UK-India FTA. Business and the UKIBC will play their parts,” he said.

Key areas of cooperation

Prime Minister Narendra Modi and his British counterpart Boris Johnson, at a virtual summit earlier this month, agreed on an ‘Enhance Trade Partnership’ laying the roadmap for more than doubling bilateral trade by 2030 and declaring their intention to negotiate an FTA. The five keys areas of the cooperation include people to people contacts, trade and economy, defence and security, climate action and health.

The two-way trade between India-UK in 2019-20 was $15.4 billion but both leaders acknowledged that there was a lot more potential and doubling trade in about a decade was feasible.

As part of Confidence Building Measures, the two countries also agreed to deliver an early market access package for sectors such as medical devices, legal services, fisheries, nursing and fruits that could generate up to 25,000 new jobs.

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