India and UK Free Trade Agreement


    In News

    • Recently, India has launched the Free Trade Agreement negotiations with the United Kingdom.


    • The FTA is expected to facilitate the target of doubling bilateral trade between India and the United Kingdom by 2030, set by the Prime Ministers of both the nations in May 2021.
    • Observing that UK was a major trade partner of India with substantial bilateral volume of trade in goods and services, the cooperation was extended across areas like:
    • tourism, 
    • technology, 
    • startups, 
    • education, 
    • climate change, etc.
    • The two nations were looking forward to a mutually beneficial trade deal with balanced concessions and market access packages in a wide range of sectors.
    • It was also agreed to explore during the FTA negotiations, the possibility of an Interim Agreement to provide quick gains for benefiting businesses in both nations. The focus is to deliver a comprehensive, balanced, fair and equitable FTA, to benefit small, medium and micro-enterprises in both nations.



    • Democracy and diaspora:
      • Both India and the UK are vibrant democracies, with a partnership built on shared history and rich culture. 
      • The diverse Indian diaspora in the UK, who act as a “Living Bridge”, adds further dynamism to the relations between the two countries.
    • Better productivity:
      • The FTA with the UK is expected to provide certainty, predictability and transparency and will create a more liberal, facilitative and competitive services regime.
    • Export:
      • FTA negotiations with the UK are expected to increase our exports in Leather, Textile, Jewellery and processed Agri products. 
      • India is also expected to register a quantum jump in the export of Marine Products through the recognition of 56 marine units of India.
    • Market access:
      • The Mutual Recognition Agreements (MRAs) on Pharma could provide additional market access. 
    • Service Sector:
      • There is also great potential for increasing exports in service sectors like IT/ITES, Nursing, education, healthcare, including AYUSH and audio-visual services. 
      • India would also be seeking special arrangements for movement of its people
    • Employment:
      • The Agreement would help generate direct and indirect employment in both nations.
    • Value Chains:
      • The FTA will also contribute in integrating value chains and help augment the mutual efforts to strengthen the resilience of supply chains.


    India-UK Relations

    • About:
      • UK-India relationship is rooted in India’s colonial history with the British and the relationship shared by both countries even after India’s independence. 
      • The bilateral relationship was upgraded to a strategic partnership in 2004.
    • Political:
      • They share a modern partnership which was upgraded to a strategic partnership in 2004.
      • The UK supports India’s proposal for permanent membership of the UNSC and is also an important interlocutor for India on global platforms. 
    • Economic Engagements:
      • Trade: 
        • UK is among India’s major trading partners and as per trade statistics of MoC&I, India’s trade with the UK in 2017-2018 was US $14.497 billion.
      • Investment: 
        • UK is the 4th largest inward investor in India, after Mauritius, Singapore and Japan with a cumulative equity investment of US $26.09 billion (April 2000-June 2018), accounting for around 7% of all foreign direct investment into India. India continued to be the third largest investor in the UK and emerged as the second largest international job creator with Indian companies having created over 110,000 jobs in the UK. 
    • Defence:
      • In 2015, the two countries agreed to elevate their Defence relationship by establishing capability partnerships in strategic areas. 
      • The institutionalised dialogue to discuss defence cooperation viz. Defence Consultative Group Meeting, is held annually at Defence Secretary level. 
      • Ajeya Warrior (army-to-army biennial exercise), the Konakan (joint navy-to-navy annual exercise) and the Indradhanush (joint air-to-air exercise) happen between India and UK.
    • Education:
      • Over the last 10 years, the relationship has grown substantially with the introduction of bilateral mechanisms such as the India-UK Education Forum, UK-India Education and Research Initiative (UKIERI), Joint Working Group on Education, Newton-Bhabha Fund and Scholarship schemes. 
    • Science and Technology:
      • Joint investment in UK-India research has grown from less than £1 million in 2008 to over £200 million. 
      • A India-UK Clean Energy R&D Centre with a focus on solar energy storage and a collaborative R&D programme in energy efficient building materials were announced. 
      • New research partnerships worth £80 million including a new Joint Strategic group on Antimicrobial Resistance (AMR) with a joint investment of up to £13 million have also been established. 
    • Cultural Linkages: 
      • Cultural linkages between India and UK are deep and extensive, arising out of shared history between the two countries. 
      • There has been a gradual mainstreaming of Indian culture and absorption of Indian cuisine, cinema, languages, religion, philosophy, performing arts, etc. 
      • 2017 was celebrated as the India-UK year of Culture to mark the 70th anniversary of Indian independence. 
    • Indian Diaspora:
      • The Indian Diaspora in the UK is one of the largest ethnic minority communities in the country.
      • As per the 2011 census, approximately 1.5 million people of Indian origin live in the UK equating to almost 1.8 percent of the population and contribute 6% of the country’s GDP. 
    • Roadmap 2030:
      • The “Roadmap 2030” for India-UK future relations was launched during India-UK Virtual Summit for-
        • revitalized and dynamic connections between people; 
        • re-energised trade, investment and technological collaboration that improves the lives and livelihoods of the citizens; 
        • enhanced defence and security cooperation that brings a more secure Indian Ocean Region and Indo-Pacific and 
        • India-UK leadership in climate, clean energy and health that acts as a global force for good.

    Way Ahead

    • Subsequent to the unveiling of FTA, the two nations should proactively and regularly engage with each other, for deliberating on the scope and coverage of the trade deal.

    Sources: PIB