UK’s Pursuit of a Free Trade Agreement with India
Negotiators from India and the UK are preparing for another round of upcoming talks to address the differences in their proposed Free Trade Agreement (FTA). Key issues such as tariffs on automobiles, medical devices, and the movement of professionals will be discussed — according to an unnamed official.
The official also added that the 14th negotiation round will be taking place this time. This time, both parties will delve into all 26 chapters of the agreement, encompassing goods, services, investments, and intellectual property.
Issues in Need of Closer Attention
Among the key areas requiring increased attention are rules of origin, Intellectual Property Rights (IPRs), social security agreements, duty concessions for electric vehicles, Scotch whiskey, lamb meat, chocolates, and several specific confectionery items. A focus on liberalising norms in service sectors such as banking and insurance is also crucial.
Beyond automobiles and medical devices, negotiators from India and the UK will tackle several crucial issues in their upcoming trade talks. They must agree on “rules of origin” for goods to qualify for tariff reductions, negotiate lower tariffs on popular items like Scotch whisky and chocolates, open up service sectors like banking and telecommunications, facilitate easier movement of skilled professionals, and clarify intellectual property rights.
Talks on Having a Separate Bilateral Investment Treaty (BIT)
A separate BIT will also be negotiated between the two nations to promote and protect their best interests in these investments. The main reason for this separate BIT mostly revolves around handling dispute settlement mechanisms, with India advocating the utilisation of local judicial remedies before international arbitration.
The FTA negotiations launched in January 2022 aimed for completion by Deepavali 2022 (in early October); however, they still need to be met, given the delays caused by political developments in the UK. Nevertheless, both countries remain committed to securing a comprehensive and ambitious agreement.
Bilateral trade between India and the UK will achieve a whopping $20.36 billion in 2022 to 2023. In the previous year, from 2021 to 2022, $17.5 billion was recorded. The remarkable $2.86 billion signifies a successful BIT; FTA has the potential to boost these numbers significantly further.
Indian industries seek easier access for skilled professionals in UK markets and tariff-free access for certain goods. The UK, on the other hand, wishes to see significant tariff reductions on its exports and expanded opportunities in Indian service sectors.
The ‘rules of origin’ clause outlines the minimum processing requirements in an FTA country, ensuring that the final product can be recognised as originating from that country. This impact clause prevents a country, part of an FTA with India, from bringing goods by a third country into the Indian market merely by labelling them.
Instead, the country must add a specified value to export the product to India. These rules of origin serve as a protective measure against the indiscriminate influx of “dumping” goods.
Bottom Line
Reaching agreements on these diverse points will be key to unlocking the full potential of this potential India-UK trade deal. With virtual sessions underway and a full-fledged round planned, both sides are actively working towards an agreement soon. This move is seen as a significant encouragement for entrepreneurs looking to start a business in the United Kingdom.
