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. 

    India-UK Bilateral Relations 

    • 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. Major areas of cooperation are:

    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.

    Source: HT