India, UK may ink trade pacts in 2021
INDIA AND THE UK ARE COMMITTED TO A FREE TRADE AGREEMENT, BUT SUCH NEGOTIATIONS ARE COMPLEX AND COULD TAKE LONGER
NEW DELHI: After Brexit, India and the UK may finalise trade agreements related to sectors such as chemicals and pharmaceuticals, financial technology, defence manufacturing, petroleum and food products in 2021, seeking an early harvest of benefits from such deals as they pursue talks on a comprehensive free trade agreement, two officials aware of the plan said.
India and the UK are committed to a free trade agreement, but such negotiations are complex and could take longer. The early harvest proposal will help the two partners grab lowhanging fruit within the framework of a comprehensive trade agreement, they said, requesting anonymity.
“The two sides are working on finer details pertaining to about five-six sectors as some announcements are expected during UK Prime Minister Boris Johnson’s India visit in January,” one of the officials said.
Johnson is the chief guest at India’s Republic Day celebrations on January 26, a significant development in terms of strategic relations between the two countries, especially after Brexit, he said.
“Prime Minister Narendra Modi spoke to Prime Minister Johnson on November 27, where the two leaders hoped for a quantum jump in the overall India-UK partnership post-Brexit as they saw huge potential for enhancing collaboration in areas of trade, investment, scientific research, energy, defence, security and climate change,” the second official said.
Some key trade deals are expected in 2021, but a comprehensive trade deal between India and the UK is expected only in two-three years, the officials said. “India is very cautious while signing any FTA because of its past experience. Various FTAs signed in a hurry by the previous governments, particularly with the Asean, are under review as these deals are heavily tilted against Indian interests,” the second official said.
Co-chairing the 17th AseanIndia economic ministers’ consultations on August 29, commerce minister Piyush Goyal said that FTAs had to be “mutually beneficial”. He asked for an early review of the Asean-India Trade in Goods Agreement (AITIGA) because the pact was hurting India’s interests, HT reported on August 30.
According to the officials, trade negotiations with UK are based on the principle of mutual benefit and arriving at an agreement is relatively easy because of the bilateral nature of negotiations. Negotiations of multilateral trade deals are cumbersome and time-consuming, they said.
India should be careful of the larger and long-term implications of FTAs, said Abhishek A Rastogi, partner at law firm Khaitan & Co. “The agreements [with UK] should clearly mention the aspects related to the country of origin of the goods and the percentage of value addition as these issues have been subject matter of debate,” he said.
“I believe, post-Brexit, the complementarities between the two dynamic economies will rise exponentially,” said Sanjay Aggarwal, president at the PHD Chamber of Commerce and Industry.