On January 13, 2022, UK government announced the launch of free trade agreement (FTA) negotiations with India.
Key Facts
- This move is being described as a golden opportunity, of putting British businesses at the front of Indian economy.
- FTA is likely to take UK’s historic partnership with India to the next level.
- With this FTA, sectors like Scotch whisky, financial services and cutting-edge renewable technology are set to benefit.
- India-UK FTA is believed to create huge benefits for both countries. It has the potential to boost bilateral trade by GBP 28 billion a year by 2035.
- The deal will also help in increasing the wages by GBP 3 billion across the UK.
First round of negotiations
The first round of negotiations is likely to start in January 2022 only. British government would make this round, UK’s quickest start of formal talks between negotiating teams.
What is an FTA?
Under the FTA, two trading partners significantly reduce or eliminate the import duties on maximum number of goods traded between them.
India-UK Bilateral Trade
India has a strong historical tie with the UK. Presently, UK is one of the most important trading partners of India. UK is significant for India as an FDI investor, after Mauritius and Singapore which have been ranked second and first respectively. Among G20 countries, UK is also one among the largest investors in India. Bilateral trade between both the countries was 15.5 billion USD in 2019-20 as opposed to 16.87 USD billion in 2018-19.
What are the significant sectors?
India engages with the UK in sectors including textiles, pharma, leather, furniture, industrial machinery, and toys. India is further looking to the UK to support it with technology-based products like medical devices, automobiles and high-quality cameras.