London, 6th August 2023: As India engages in negotiations for a free trade agreement with the United Kingdom (UK), it is resolutely safeguarding the interests of its domestic players. While discussions are underway to potentially grant duty concessions in the automobile sector and specific confectionery items, India has excluded particular demands from Britain, especially concerning data-related issues and the dairy sector.
The current negotiations have reached a pivotal juncture and are poised to conclude either in October or November. Recent high-level meetings between Commerce and Industry Minister Piyush Goyal, Commerce Secretary Sunil Barthwal, and senior British officials in London have given impetus to the ongoing discussions.
An air of optimism surrounds the upcoming meetings between trade ministers from India and the UK at the G20 trade ministers meeting in Jaipur. Encouragingly, a majority of contentious issues between the two nations have been successfully addressed, boding well for potential agreements.
While the prospects of duty concessions in the automobile sector have been widely debated with domestic stakeholders, the dairy sector remains a subject of sensitivity and is being protected to preserve local interests.
Both India and the UK, prominent players in the services sector, are collaboratively working to ease norms in various areas such as IT, healthcare, accounting, education, medical practices, banking, insurance, legal, and telecommunications. The UK has expressed a particular interest in sectors like banking, insurance, legal services, and telecommunications.
Challenges regarding data localization norms in India have been acknowledged, but constructive efforts are being undertaken to identify common ground. The focus areas for resolution include investment treaties, intellectual property rights (IPRs), and rules of origin.
Of the 26 chapters in the free trade agreement, 19 have already been finalized. The ongoing discussions revolve around product-specific rules, value addition, and certification within the rules of origin chapters. These provisions are pivotal to preventing unfair trade practices such as the dumping of goods and promoting an equitable trade environment.
The bilateral trade between India and the UK has been witnessing substantial growth, reaching USD 20.36 billion in the fiscal year 2022-23. Key exports from India encompass ready-made garments, textiles, gems and jewelry, engineering goods, petroleum and petrochemical products, transport equipment, spices, machinery, pharmaceuticals, and marine products. The UK’s imports consist of precious and semi-precious stones, ores, metal scraps, engineering goods, professional instruments, chemicals, and machinery.
The services sector highlights the UK as a significant market for Indian IT services in Europe. Concurrently, the UK’s role as a major investor in India has flourished, with USD 1.74 billion in foreign direct investment flowing in during the fiscal year 2022-23.
At the heart of these negotiations lies the overarching goal of reducing or eliminating customs duties on a comprehensive array of traded goods, stimulating trade in services, and fostering investment flows between the two nations.
