With Britain’s exit from the European Union (EU) just a few months away and uncertainty looming large on the terms of parting, UK Secretary of State for International Trade Liam Fox is likely to visit India early next month to discuss the future of bilateral trade post-Brexit with his Indian counterpart Suresh Prabhu. “The two may also take forward the tentative unofficial talks on a free trade agreement between the UK and India and what all it could include,” an official close to the development told BusinessLine .
Nearly 800 Indian companies have their presence in Britain employing more than 1,00,000 people and have a combined revenue of 46.4 billion pounds. “Many of these companies use the UK as a gateway to do business with other parts of Europe. The future of these companies and their continued presence in the UK hangs in balance and are tied to the terms of Brexit,” the official added.
Fox is expected to explain the situation to the Indians and plan a path ahead for future cooperation between the two countries independent of the EU. “India and the UK have always shared a close economic relation. It has been the second largest trade partner for India in the EU after Germany. It is in the interest of both countries to work towards intensifying the relations,” the official said.
While UK’s official exit from the EU will take place in March 2019, the old rules and regulations will continue till December 2020.
Possibility of FTA
On trade in goods, the draft framework worked out by negotiators from the UK and the EU last week mentions an agreement in principle the need for comprehensive arrangements creating a free trade area, combining deep regulatory and customs cooperation, building on the single customs territory provided for in the withdrawal agreement.
“If there is favourable Customs Agreement and a FTA, then terms of trade between the UK and the EU may not change much and Indian traders and investors need not worry about a change in strategy. However, the British PM is under pressure in her country to maintain as much distance from the EU as possible. So a lot of uncertainty remains on the economic future,” the official said.
Fox may also try to convince India to work on a FTA with the UK as it will no more be part of the EU bloc that is negotiating a free trade pact with India. If the UK is able to offer India additional access for its skilled labour, New Delhi may be interested in the negotiations and Prabhu may communicate this to Fox.