UK and India Free Trade Agreement (FTA)


    In News

    • Recently, India and the United Kingdom concluded the first round of discussion for the ambitious Free Trade Agreement (FTA)


    • The discussion was conducted over two weeks and included 32 sessions that dealt with 26 policy areas,
    • The discussion spanned over the topics:
      • Customs and trade facilitation, 
      • sanitary and phytosanitary measures, 
      • technical barriers to trade, 
      • competition, 
      • SMEs, 
      • sustainability, 
      • transparency, 
      • trade and development, 
      • Geographical Indicators (GIs) and 
      • digital issues.
      • Investment 
      • Intellectual property.


    • Regional balance: 
      • Britain is tilting to the Indo-Pacific, where India is a natural ally. India, which is looking at a neighbourhood that has been transformed by the rise of China, needs as wide a coalition as possible to restore a semblance of regional balance.
    • Trade, Investment & Jobs: 
      • India-UK trade was worth £23 billion in 2019, and both countries want to double the figure by 2030. Almost half a million jobs are supported across India and the UK through investments in each other’s economies.
    • Market for British goods: 
      • A free trade deal of the UK with India – the world’s largest democracy, fifth biggest economy, a nation of 1.4 billion people will create a huge market for British goods like whisky, cars and services.
    • Benefits for Businesses:
      •  A trade deal with India will break down barriers and make it easier for British businesses to secure more investments, higher wages and lower prices in Britain.
    • Skilled Labour Access: 
      • India will be looking for concessions on Indian skilled labour accessing UK markets.
    • Defence Strengths: 
      • Britain could also contribute to the strengthening of India’s domestic defence industrial base. The two sides could also expand India’s regional reach through sharing of logistical facilities.


    • Bitter Past: 
      • The bitter legacies of the Partition, anti-colonial resentment and Britain’s prejudices and its perceived tilt to Pakistan have long complicated the engagement between India and the UK.
    • Political Negativity: 
      • While there is no way of fully separating South Asian and British domestic politics, India’s problems have been accentuated by the British Labour Party’s growing political negativity towards India.
    • WTO related issues: 
      • Interim FTA that do not convert into full FTAs can also face challenges from other countries at the World Trade Organisation(WTO) because the latter only permits for the preferential treatment between countries which have bilateral agreements between them.
    • Domestic Politics: 
      • The large South Asian diaspora in the UK transmits the internal and intra-regional conflicts in the subcontinent into Britain’s domestic politics.
    • Engagement with EU: 
      • The UK needs to sort out its own internal deliberations on the future of its trajectory with the EU. 

    Way Ahead

    • The negotiations were productive and reflected the shared ambition to secure a comprehensive deal to boost trade between the 5th and 6th largest economies in the world.
    • Both teams maintain a shared ambition to conclude negotiations by the end of 2022 as part of both sides’ efforts to secure a comprehensive agreement. 
    • India and the U.K. should also consider concluding an Interim Agreement before the comprehensive agreement is signed.

    Free Trade Agreement

    • A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. 
    • Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
    • The concept of free trade is the opposite of trade protectionism or economic isolationism.
    • How a Free Trade Agreement Works?
      • In the modern world, free trade policy is often implemented by means of a formal and mutual agreement of the nations involved. However, a free-trade policy may simply be the absence of any trade restrictions.
      • A government doesn’t need to take specific action to promote free trade. This hands-off stance is referred to as “laissez-faire trade” or trade liberalisation.
      • Governments with free-trade policies or agreements in place do not necessarily abandon all control of imports and exports or eliminate all protectionist policies. In modern international trade, few free trade agreements (FTAs) result in completely free trade.
    • Free trade agreements reduce or eliminate barriers to trade across international borders.
    • Free trade is the opposite of trade protectionism.
    • In the U.S. and the E.U., free trade agreements do not come without regulations and oversight.

    Source: TH