Free trade pact: India-UK to sign early harvest deal by March 2022
India and the United Kingdom (UK) aim to launch negotiations on a free trade agreement (FTA) by November this year, sign an interim agreement involving high-priority products and services by March next year, and later conclude a comprehensive agreement, India’s commerce ministry said on Tuesday.
The tentative timeline for FTA and other trade matters was chalked out during discussions between commerce minister Piyush Goyal and UK trade secretary Elizabeth Truss, the ministry statement said.
Goyal told an industry event on September 3 that India was negotiating trade agreements with “democracies” that believe in “transparent rule-based trading opportunities” and was in an advanced stage to conclude early harvest under a free trade agreement with the UK.
“Proposed FTA between India and UK is expected to unlock extraordinary business opportunities and generate jobs. Both sides have renewed their commitment to boosting trade in a manner which benefits all,” the commerce ministry said. After Brexit, the UK has been pursuing its new trade policy that includes negotiating trade deals with several countries at the earliest.
Goyal said there was a tremendous interest in the business community in both countries about this FTA. After prime ministers of the two countries announced the Enhanced Trade Partnership (ETP) on May 4, 2021, both sides have made substantial progress on various aspects of the partnership.
“Substantial work has already been done and extensive stakeholder consultations have been held involving industry/business associations, export promotion councils, buyers/sellers associations, regulatory bodies, ministries/departments, public research bodies, etc,” the statement said.
Goyal said bilateral working groups (BWGs) for different tracks have been formed to understand ambitions, interests and sensitivities of each other to facilitate accelerated progress during negotiations. The meetings of these working groups are in progress and are likely to be completed this month, he said.
He hoped that these BWG discussions will help both sides in understanding each other’s policy regimes and help begin their joint scoping discussions from October 1, 2021 for finalising the terms of reference for launch of negotiations in November.
Goyal said an interim trade agreement, as a first step of an FTA will allow both countries to immensely benefit from the early gains of the partnership. He emphasised the need to strike a balance between commitments and concessions in goods and services.
In services, certain services of mutual interest may be included in the interim agreement through request offer approach wherein the two countries may include priority sectors that are immediately deliverable. “If necessary, we may also explore signing of few Mutual Recognition Agreements in selective services like nursing and architecture services,” the minister said.
India is a key economic partner of UK. Merchandise trade between the two countries was $15.45 billion in 2019-20 with the trade balance in favour of India. The ministry of external affairs (MEA), quoting the Department for International Drade (DIT) inward investment statistics for 2019-2020, said India invested in 120 projects and created 5,429 new jobs in the UK to become the second-largest source of foreign direct investment (FDI) after the US in 2019. As per the CII-Grant Thornton India meets UK Report 2020, there are over 850 Indian companies operating in the UK, with combined revenues of almost £41.2 billion.