The government is expected to make it clear to visiting British Prime Minister Theresa May that while it is “open” to the idea of having a comprehensive trade agreement with the UK, there is no scope of initiating formal negotiations at this point.
May, who is embarking on her first outside the EU to India starting November 6, is said be coming here with the single-most important agenda of securing a comprehensive trade agreement. She is scheduled to meet Prime Minister Narendra Modi on Monday.
During the meeting, Modi is expected to express his commitment to engage with the UK to strengthen bilateral trade and economic ties, but there will be no specific promise on beginning the talks formally, said sources.
“India has already indicated to the UK that it is open to the idea of having a separate trade agreement with it, there will not be any commitment on initiating formal negotiations. Although Britain has been insisting on starting the talks now, we are not ready to go for any commitment unless we are sure on what terms it leaves the EU,” a top official involved in the talks told
However, the official said that India might offer to open a dialogue mechanism on trade under the chairmanship of Commerce and Industry Minister Nirmala Sitharaman and UK’s International Trade Secretary Liam Fox.
She is expected to tell Modi about the benefits of having a preferential trade arrangement with UK and the concessions that will follow.
Ever since Britain voted to leave the EU, May has been struggling to strengthen UK’s trade and investment ties with some of its leading economic partners. During his last visit to India in August, Fox had talked about the “future potential” for enhancing trade ties.
So far, four UK ministers have visited India in an effort to bolster economic ties with India.
“The UK’s share in India’s total trade had been falling for last couple of years. Under the India-EU FTA, the UK had been pushing for opening up legal and financial services. India’s main demand under any trade pact has been opening up of markets for its services. So, we should wait and watch,” said Biswajit Dhar, Professor of Economics, Jawaharlal Nehru University.
Support for dealMeanwhile, the chorus for a bilateral trade agreement is growing among the private sector on both sides.
“Time waits for no one and it is important that companies don’t wait for the Brexit dust to settle and a comprehensive bilateral economic agreement to be inked to do business — the opportunity is now,” the UK India Business Council (UKIBC) said in a statement.
According to the UKIBC, India trades more with Indonesia, Germany and Japan, than with the UK. While trade between India and UK grew by 170 per cent between 2004 to 2014, India’s total trade grew by 800 per cent in the same period.
On the other side, the Confederation of Indian Industry (CII) has urged both governments to take urgent measures to arrest the decline in bilateral trade.
Bilateral trade in goods dropped to $14 billion in 2015-16 from $15.8 billion in 2013-14, CII said in a note.