India and UK Nearing Free Trade Agreement: Export Opportunities in Focus
New Delhi, October 11, 2023 – India and the United Kingdom are poised to finalize a Free Trade Agreement (FTA) by the end of this month, bringing with it a host of export opportunities for businesses in both nations. A 30-member official delegation from the UK is set to kickstart the next round of negotiations with their Indian counterparts this week, with the aim of resolving the remaining issues and paving the way for the conclusion of the FTA.
The two countries recently wrapped up their 13th round of negotiations, with India's Commerce Secretary, Sunil Barthwal, leading the discussions. During these negotiations, a dedicated UK team dealing with investment-related matters was already on Indian soil, working closely with officials from the Finance Ministry to advance discussions on the proposed bilateral investment treaty (BIT).
One of the key remaining issues to be addressed in the FTA negotiations is the "rules of origin," a provision essential for determining the origin of goods. This provision ensures that minimal processing occurs within the FTA country, guaranteeing that the final manufactured product can be labeled as originating from that country. By establishing rules of origin, the FTA parties prevent goods from third countries from being introduced into the Indian market without appropriate value addition or processing.
As part of the FTA, India and the UK are also negotiating the terms of the bilateral investment treaty. These treaties are critical for promoting and safeguarding investments made in each other's countries. The primary point of contention currently revolves around the mechanism for settling disputes. India has proposed utilizing local judicial remedies for resolving disputes before resorting to international arbitration, which is seen as a protective measure for both countries.
For India, this FTA presents an opportunity to access duty concessions in the automobile sector and increased market access for skilled professionals, particularly in the Information Technology and healthcare sectors, in the UK market. Indian industry players are eagerly anticipating the doors this agreement will open for their skilled workforce and various goods, which could potentially enter the UK market with zero customs duties.
Conversely, the UK is keen to secure substantial cuts in import duties for items such as Scotch whiskey, automobiles, lamb meat, chocolates, and certain confectionery products. These negotiations hold the promise of enhancing the flow of goods and services between the two countries while also fostering stronger economic ties.
With both India and the UK actively engaged in negotiations and aiming for a conclusive agreement by the end of this month, businesses on both sides are preparing for new export opportunities and the chance to tap into each other's markets. This forthcoming FTA holds the potential to redefine trade relations between these two nations and create a win-win situation for their economies.