Deciphering the India-UK Free Trade Agreement
India and the UK recently concluded the fifth round of talks for a free trade agreement (FTA), designed to encourage trade and investment relations. Expectations are that an FTA will be signed by October 2022.
What is a free trade agreement?
It is an agreement between two or more countries to minimize barriers to imports and exports of products and services among them. It includes reducing tariffs, quotas, subsidies or prohibitions which could limit exchange of goods and services across borders. The FTA might allow free trade among the two nations with a few exceptions. This involves a formal and mutual agreement signed between two or more countries. The agreement could be comprehensive and include goods, services, investment, intellectual property, competition, government procurement and other areas.
What is the status of the India-UK FTA?
India and the United Kingdom have a multi-dimensional strategic partnership, and are actively engaged in bilateral trade. The two countries agreed to begin formal negotiations for an FTA in January 2022, aiming to advance trade and investment relations between them. The fifth round of FTA talks concluded on 29 July, and the expectation is that negotiations would be completed and the stage set for the FTA by October. The FTA is important for both countries as it would provide a boost and create a robust framework of overall trade and investment between the two countries.
Which are the countries with which India has FTAs?
As of April 2022, India had 13 FTAs, including the South Asian Free Trade Area, and with Nepal, Bhutan, Thailand, Singapore, Japan and Malaysia. The 13 also include the agreements with Mauritius, UAE and Australia signed during the last five years. Additionally, India has also signed six limited Preferential Trade Agreements.
What is the level of India-UK trade?
Bilateral trade stands at $50 billion (ie approx. $35 billion in services and $15 billion merchandise). India is UK’s 12th largest trading partner and accounts for 1.9% of UK’s total trade in four quarters to the end of 2022. UK is the seventh largest export destination for India. The trade balance maintained by India with UK has largely been a surplus. Top three services exported from India to UK are technical, trade-related and other business services, professional and management consulting services and travel.
How will an FTA with UK benefit India?
Apart from reducing tariffs, the FTA also looks at lowering non-tariff barriers, particularly technical barriers to trade around rules of origin, investor protection and IPR. MoUs on joint recognition of certain educational qualifications and an outline pact on healthcare workforce have  already been signed. Also, both UK and India have set up panels for a totalization deal being advocated by India and permitting Indian legal services for the UK.
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