India-UK Trade Negotiations

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The United Kingdom (UK) starts preparations for trade negotiations with India.

Key Points

• Removal of barriers: The UK started the preparations for the trade deal, under which Britain wants the removal of barriers to doing business and trading with India, including the removal of tariffs of up to 150% on whisky and 125% on British-made cars.
• Inputs from Stakeholders: The UK government is seeking input from consumers and businesses across all sectors that will help it craft a deal that includes closer cooperation in future-focused industries such as science, technology and services and creating high-value jobs across Britain.
• International services hub: The UK also wants to make it easier for British services firms to operate in India, thereby boosting the country’s status as an international services hub. 
• Targets Indian Youth: India’s growing middle-income population and connected youth will be the target consumers for goods and services from the UK.

Enhanced Trade Partnership

• In May 2021, the two countries launched an Enhanced Trade Partnership that envisages facilitating market access in specific sectors and unveiled plans to finalise an interim trade deal by mid-2022 as a precursor to a free trade agreement.
• It is a part of the UK’s efforts to ramp up trade ties with countries around the world following its exit from the European Union (EU).
• Britain will open up its fisheries sector to more Indian players, facilitate more opportunities for nurses, recognise Indian seafarers’ certificates and enter into a joint dialogue on a social security agreement.
• In return, India lifted restrictions to enable British fruit producers to export their produce to the country and improved access for medical devices through the acceptance of “UK Certificates of Free Sale”. 
• The two sides will also work towards reciprocal opening up of legal services.
• These actions are likely to generate some 25,000 new direct and indirect jobs in India.

Opportunities

• 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.

Concerns

• 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.
• 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. And, Brexit raises major issues for Indian business.
• Partner in BRI: UK is an active participant in the Belt and Road Initiative of China for which India raised sovereignty issues

Way Forward

• Both countries must strive for an agreement that pushes new frontiers in industries of the future and helps to build a greener, more innovative and more services-led economy that will deliver higher-paying jobs for both nations.
• The economic relationship between the UK and India certainly remains a robust one. The two nations should look forward to a potential FTA.
• The UK and India must complete a “pre-negotiation scoping phase” or a period of engagement with businesses and the public. 

Source: HT