India, UK to work on open trade pact after Brexit completion: Jaitley
Both agree on £500-million fund for clean-energy projects
India and the United Kingdom (UK) may look to work on a free-trade agreement (FTA) after the latter formally completes its separation from the European Union (EU), Finance Minister Arun Jaitley said on Tuesday. Jaitley met British Chancellor of the Exchequer Philip Hammond in New Delhi, where the two discussed a number of issues and signed an agreement to set up a £500million fund to finance clean-energy projects.
Addressing reporters along with Hammond after their meeting, Jaitley said that a formal dialogue on a possible trade agreement can start only after the completion of Brexit, which is expected to take about two years.
"Obviously this can be formally discussed after the Brexit takes place but it is probably going to imply a far wider and a far higher engagement between the two countries. What shape it is going to take can only be formalised after Brexit negotiation," Jaitley said. The British Parliament last month approved the Brexit Bill, paving the way for exit of the UK from the EU.
Under current rules, EU member-nations cannot negotiate trade deals on their own. British trade with India was so far was covered under the proposed India-EU FTA, negotiations on which are still ongoing.
As of 2015-16, India's merchandise trade with the UK was $14.02 billion, which is a 2.21 per cent fall over 2014-15. The last time trade saw a positive growth was 2013-14, when it grew 6.16 per cent.
Jaitley said on Tuesday that India, in its communication with the UK government, has stated that after Brexit it will look for more open trade, and more trade arrangements.
"We have continued to consolidate past success and to identify new areas where we can work together over the next couple of years, preparing for the point where Britain leaves the EU and is able to engage with Indian colleagues in a deep discussion about a future FTA between the UK and India," Hammond said.
India and the UK also decided to set up a £500-million fund to bankroll green-energy projects with both governments together investing £240 million. The fund will be set up as a sub-fund of the ~40,000 crore National Investment and Infrastructure Fund (NIIF), which was formed in 2015 to finance new as well as existing projects.
While India and the UK will be anchor investors in Green Growth Equity Fund and will invest £120 million each, the remaining £260 million will come from private investors.
"Both governments reaffirmed their commitment to anchor-invest up to £120 million each in the joint fund which aims to raise around £500 million and has the potential to unlock much more in the future," said a joint statement issued after the ninth UK-India Economic and Financial Dialogue in New Delhi.
The fund will focus initial investments on India's rapidly growing energy and renewable market and a fund manager is expected to be selected later this year, Hammond said.
"Our first major step in the fund (NIIF) has been taken and there is going to be a sub-fund. This is going to be the first major beginning as far as the fund is concerned," Jaitley said.