This summer saw the inauguration of new governments in New Delhi and London. With the business of national polls completed, the two countries are expected to resume talks on a Free Trade Agreement (FTA). Mint looks at the prospects for a speedy conclusion to the talks.
This summer saw the inauguration of new governments in New Delhi and London. With the business of national polls completed, the two countries are expected to resume talks on a Free Trade Agreement (FTA). Mint looks at the prospects for a speedy conclusion to the talks.
Will new govts in India and UK spur FTA talks?
PM Narendra Modi, who has come back for a third time, and his UK counterpart Sir Keir Starmer, who led the Labour Party to a formidable win, discussed the FTA in their first telephone conversation, showing it is a priority. FTA talks that began in January 2022 had made progress on most of its 26 chapters. Trade and technology have been identified as two key elements to boost ties to the next level. “Our FTA negotiations is the floor not the ceiling of our ambitions to unlock our shared potential and deliver growth, from Bengaluru to Birmingham,” UK foreign secretary David Lammy said in a visit to India this week.
Will new govts in India and UK spur FTA talks?
PM Narendra Modi, who has come back for a third time, and his UK counterpart Sir Keir Starmer, who led the Labour Party to a formidable win, discussed the FTA in their first telephone conversation, showing it is a priority. FTA talks that began in January 2022 had made progress on most of its 26 chapters. Trade and technology have been identified as two key elements to boost ties to the next level. “Our FTA negotiations is the floor not the ceiling of our ambitions to unlock our shared potential and deliver growth, from Bengaluru to Birmingham,” UK foreign secretary David Lammy said in a visit to India this week.
How’s the progress been on the FTA?
Lammy met with Modi and external affairs minister S. Jaishankar in New Delhi on Wednesday. Modi later said, “Remain committed to elevating the ties. Welcome the bilateral Technology Security Initiative and the desire to conclude a mutually beneficial FTA”. The ministry of external affairs said: “Both sides appreciated the substantial progress made in the India-UK FTA negotiations and looked forward to its early conclusion to achieve a mutually beneficial FTA.” Both countries are expected to take up the discussions from where they were left off by the former Conservative government.
With which countries does India have FTAs?
India signed four FTAs between 2021 and 2024. These are with Mauritius, the UAE, Australia and the European Free Trade Association. These focus on “gaining access to the Western and African markets. India’s young demography and growing middle-class provide an attractive market for its Western FTA partners,” the 2023-24 Economic Survey pointed out.
Why is the pact with the UK important?
The UK, which left the EU single market in January 2020, is keen to clinch a pact with India. Labour sees substantial benefits in an FTA that provides access to the vast Indian market and scraps high tariff barriers. India on its part has stayed out of mega deals, wary of Chinese made goods flooding the Indian market. But New Delhi is in talks with partners with which it has trade complementarities. India has set a target of $800 billion in exports in goods and services for 2024-25 and for this, trade pacts are important.
What are the problem areas in the FTA talks?
The UK wants customs duty cuts on electric vehicles, scotch whisky. lamb meat, chocolates and certain types of confectionary. It also wants access for its telecom, legal and banking and insurance services. India wants its skilled IT and healthcare workers to be able to live and work in the UK, besides market access for several goods at zero customs duties. However, the UK’s plans to impose a carbon tax on imports is also a problem for New Delhi.
Elizabeth Roche is Associate Professor, Jindal Global University.
