Britain After the formation of the new Labour Party government in 2018, the way for a free trade agreement between India and Britain has been cleared. In the first month of the formation of the government, British Foreign Minister David Lammy said on his visit to India that his government wants to enter into a free trade agreement (FTA) with India as soon as possible. The British Foreign Minister has said that ‘the Labour Party is ready for this agreement.’ In such a situation, it is expected that both the countries will complete this deal by the end of this year i.e. before 31 December 2024. What will change between the two countries after this agreement? What relief will the businessmen of both the countries get? Which things will the common people get cheaper. Come, let’s know the A to Z things of this free trade agreement.
FTA talks will resume soon
The newly elected Labour government in Britain has said that the negotiating teams will soon sit at the negotiating table again to enter into a free trade agreement (FTA) with India. Britain’s Commerce Minister Jonathan Reynolds clarified his ministry’s vision for international trade deals. He said that economic growth will be at the center of the negotiations to implement high-quality agreements. He said that these agreements will help the British business sector to access international markets and promote jobs. The UK Commerce Ministry said that it also plans to publish a trade strategy which will be linked with the government’s industrial strategy.
What did Foreign Minister David Lammy say?
Britain’s Foreign Minister David Lammy said, “India is the emerging superpower of the 21st century. With a population of 1.4 billion, it is the world’s largest country and one of the world’s fastest growing economies.” He said, “Our free trade agreement talks are not the ceiling of our ambitions but the base, which is related to our desire to expand our shared potential and grow from Bengaluru to Birmingham.” A statement issued by the British government said that Lammy will emphasize on taking the UK-India partnership forward afresh, in which he will negotiate a free trade agreement, which will benefit the economies of both countries. The statement said that entering into a free trade agreement with India is one of Britain’s commitments.
Why is Britain considering this deal important?
Britain’s economy is facing a severe recession. The new government will try to get out of it. According to Reynolds, promoting foreign trade is necessary for a strong economy at the domestic level and hence there will be no delay in taking forward trade talks with our international partners. He further said, from the Gulf to India, our trade program is ambitious and uses Britain’s strength to give our businesses access to some of the world’s most exciting economies. Reynolds said that his negotiating team will start talks as soon as possible.
13 rounds of talks have been held
India and Britain started negotiations on FTA in January 2022. 13 rounds of talks have been held between the two countries. The 14th round of talks was halted due to elections. Now it is expected to start soon.
What are the benefits of having an FTA between India and UK?
- Reduction in Tariff: India is seeking lower tariffs for fashion, homeware, furniture, electrical and general industrial machinery.
- Exemption from import duty: SMEs in textiles, apparel and gems and jewellery have previously benefited from the complete removal of import duties due to India’s trade agreements with the UAE and Australia.
- Relief from Double Taxation: India and Britain will get relief from double taxation. This will benefit the businessmen of both the countries.
- Raising funds will be easier: Under the FTA, the UK will also provide Indian businesses access to funding and expertise. Indian businesses will also be able to raise funds from the London market through listing and issuing bonds.
- Many things will become cheaper: With the FTA, India will cut tariffs on cars, scotch whisky and wine. This will make these things cheaper here.
- Bilateral trade will get a boost: The early completion of the FTA is expected to boost bilateral trade. Bilateral trade between India and the UK is projected to increase from $17.5 billion in 2021-22 to $20.36 billion in 2022-23. Having an FTA will boost bilateral trade between the two countries.
What benefit will India get?
Indian exports will get a boost. India’s labour-intensive sectors such as apparel and gems and jewellery have seen a sharp decline in market share over the past five years. Indian textile exports face tariffs of up to 10% in the UK. Having an FTA could bring India at par with competitors such as Bangladesh, and boost textile exports.
What is FTA?
Free Trade Agreement (FTA) is a business agreement under which bilateral trade is promoted. For this, changes or reduction is made in the tax structure. This can be between two or more countries and groups. India first signed this agreement with the countries of East Asia.
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