India and the U.K. are reportedly on the brink of concluding a free trade agreement (FTA) as both sides are working towards resolving differences on key issues. A senior government official has revealed that negotiations are in the final stages, with a broad consensus already reached on matters related to automobiles and spirits. However, the official emphasized that nothing is agreed till everything is agreed.
The 11th round of talks, which recently concluded, witnessed the participation of Commerce and Industry Minister Piyush Goyal and Commerce Secretary Sunil Barthwal, who traveled to London to take stock of the negotiations. Out of the 26 chapters in the FTA, 19 have already been closed.
The remaining issues that need to be addressed include intellectual property rights (IPRs), rules of origin, and the investment treaty. In the rules of origin chapters, both countries are discussing product-specific rules, value addition, changes in chapter heading, and certification. These provisions aim to prevent the dumping of goods in the Indian market and promote fair trade practices.
Notably, the U.K. will be the first developed country to have a comprehensive FTA with India, marking a significant milestone in their economic relations.
The negotiations also cover a separate agreement on bilateral investment between India and the U.K., which is expected to be concluded simultaneously with the FTA.
The Indian industry has expressed its desire for greater access for skilled professionals in the U.K. market and the removal of conditions related to the three-year minimum maturation period for Indian whiskey. On the other hand, the U.K. seeks a substantial reduction in import duties on Scotch whiskey and more opportunities for U.K. services in the Indian markets.
In terms of trade, the bilateral relations between India and the U.K. have been growing steadily, with trade volume reaching $20.36 billion in 2022-23 compared to $17.5 billion in the previous fiscal year. Ready-made garments, textiles, gems and jewelry, engineering goods, and pharmaceuticals are among India’s major exports to the U.K. Conversely, the U.K.’s main imports from India include precious and semi-precious stones, engineering goods, chemicals, and machinery.
The U.K. is a significant market in Europe for Indian IT services, while the U.K. itself is one of the top investors in India. In the 2022-23 fiscal year, India received $1.74 billion in foreign direct investment from the U.K., reflecting a substantial increase from the previous year.
Overall, the India-U.K. FTA holds immense potential for both nations, offering opportunities for increased trade, investment, and economic cooperation. While negotiations are progressing well, it remains to be seen when the talks will be concluded and the agreement officially signed.
