India-UK FTA negotiations: A step towards closer ties

Introduction

Currently, India and the UK are discussing a possible free trade agreement (FTA). Indeed, the success of this FTA will represent an important move towards greater economic interdependence between the two nations.

Negotiations on this started in January of last year till now. On several important issues, both parties have advanced and include tariffs, market access, and intellectual property rights. Nevertheless, there are certain unresolved matters, which may impede the signing of a final document.

Potential benefits of the FTA

There are several potential benefits that an India-UK FTA would offer to both countries.

For India:

·??????? Improved opportunity for India’s goods to flow into the UK market

·??????? Creating job opportunities and attracting foreign investors

·??????? Lowering import costs from the United Kingdom as well

·??????? Boosting competitiveness of Indian businesses

·??????? Strengthening the process of opening India’s internal economy for international competition and trade.

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For the UK:

·??????? ?Opening of the Indian market to UK goods and services.

·??????? Cutting of import costs from India.

·??????? Boosting competitiveness of UK businesses

·??????? Britain’s post-Brexit trade options

·??????? Enhancing relations with an important emerging power – India

·??????? Challenges in the negotiations.

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However, several issues must be addressed for the India-UK FTA to be achieved.

Tariffs: For example, there are quite a many high import levies in India for many commodities, such as agricultural products, automobiles, etc. The UK has lower tariffs; therefore, it seeks to open the Indian market by reducing tariffs.

Market access: In certain sectors like, the retail and e-commerce industry, India restricts foreign investments. The United Kingdom wants India to lower its barriers in what they would call, a compensation package for market entry of British companies.

Intellectual property rights: Historically, the protection of intellectual property rights in India is weak. In return for market access, the UK is striving to force India to develop its intellectual property rights protection policies.

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Other challenges include:

Rules of origin: The criteria for determining the goods that qualify for the preferential tariff duty under the FTA are based on the rules of origin. The parties should discuss and agree on these rules that ought to be respected to avoid disagreements.

Dispute settlement: There should be a fair and effective dispute settlement mechanism in the FTA.

Data protection: India is in the process of developing a new data protection bill. The UK is pressurizing India to ensure that the new bill is aligned to UK’s own data protection statutes.

Conclusion

The India-UK FTA could greatly reinforce economic cooperation and lead to increased trade and investment, more employment opportunities, and overall improvement in welfare in the two countries.

However, both parties are trying their best so that a mutually acceptable solution is found. The India–UK FTA, if it succeeds, will establish a new benchmark for FTAs between developed and developing countries.