India-UK Free Trade Agreement (FTA)

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• Free Trade Agreement talks with U.K. could be delayed to January 2022.

About

• Apart from rising presence of new variants of CoronaVirus, Cabinet change in Britain and need for more “pre-negotiation” talks cited as main reasons.
• The timelines on the FTA negotiation, which included the announcement of an “Early Harvest Agreement” by March 2022, had been decided during a meeting.

Early Harvest Agreement

• Early harvest agreements are used to liberalise tariffs on the trade of certain goods between two countries or trading blocs before a comprehensive Free Trade Agreement (FTA) is concluded.
• The signing of the Early Harvest deal would provide both India and the UK a wide range of benefits that would contribute towards a boost in economic recovery in the post-pandemic era, and build confidence and momentum before signing the FTA. 
• India’s renegotiations with its trading partners should complement its domestic policies namely ‘Make in India’ and ‘Atma Nirbhar Bharat’. 

Road to a U.K.-India Free Trade Agreement: Enhancing the Partnership and Achieving Self-reliance

• A report by the U.K.-India Business Council, which had been consulted by the British Government ahead of the talks, had flagged India’s Intellectual Property (IP) enforcement regime, gaps in pharma sector regulations, drug price controls, norms related to data localisation and governance.
• The Council also flagged the high tariffs like 150% on U.K.-made Scotch Whiskey and the ban on its sales in CSD canteens as causes for concern.

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. 

Way Ahead

• Prompt Actions: It is essential for both countries to become proactive and prompt in finalizing the bilateral agreement to rejuvenate the existing bilateral trade between India and the UK. 
• Regular Interactions: Both nations should continuously meet and engage in discussions related to mitigating bilateral trade issues, defense ties, renewable energy, skill development and other vital areas. 

Source: TH