London/New Delhi: India-UK Free Trade Agreement, which missed Diwali deadline, should get much-needed boost with Rishi Sunak take over as Britain’s first Indian-born Prime Minister as experts see political stability in the UK giving impetus to negotiations.
India and Britain launched Free Trade Agreement (FTA) negotiations in January in a bid to conclude Diwali talks, but the deadline was missed due to a lack of consensus on issues.
Sunak, in his previous role as Chancellor of the Exchequer, had expressed his support for the FTA as he saw huge opportunities for both countries in the fintech and insurance sectors.
Political stability in the UK now would help speed up pact negotiations, which could potentially double bilateral trade by 2030, experts say.
Total trade between India and UK stood at USD 17.5 billion in 2021-2022.
Sunak, 42, became Britain’s first Indian-born prime minister on Monday.
“This is very positive news for India. The development will certainly help provide much-needed momentum to the talks,” said Federation of Indian Export Organizations (FIEO) Vice President Khalid Khan.
However, Biswajit Dhar, a professor at Jawaharlal Nehru University, said the new British prime minister would first like to focus on domestic issues and put the economy in order.
“Trade deals don’t happen when there’s a crisis. They happen when the economy is doing well,” Dhar said.
Another trade expert added that the two sides should be in no rush to wrap up the talks and that things should first be allowed to stabilize in the UK.
“I am very much in favor of India playing an increasingly influential role in the region, and indeed, in the world as a massive economy and the largest democracy in the world and an FTA would prove a plus. great champion of this cause,” Sunak said in July. .
Financial services, he said, was an area of enormous opportunity for both countries.
“India’s goal is to spread insurance throughout the economy because insurance is a great thing to enable people’s protection and growth. We can help with that in the UK because we have a fantastic insurance industry,” he said.
India recently signed trade deals with the United Arab Emirates and Australia, but talks with the UK have run into an issue of easier access to skilled Indian workers.
New Delhi is also seeking to recover payments made by Indian workers to Britain’s social security system under the deal.
The City of London Corporation, the British capital’s financial hub, expressed hope that Sunak’s focus on services would take the FTA in the right direction.
“A trade deal with India could be one of the most ambitious and commercially significant deals for the UK,” said Chris Hayward, policy chairman for the City of London Corporation.
“With negotiations going beyond Diwali, this presents us with an opportunity to prioritize the content of the agreement. And we hope the new prime minister will provide further impetus to reach an agreement,” he said. .
Services account for around 70% of annual trade between the two countries. “So a deal that doesn’t deliver for this sector would be a missed opportunity. Businesses will want the deal to focus on facilitating digital trade, the free flow of data and making it easier for people to work and live in each other’s countries.
“This will ultimately bring significant benefits to consumers and businesses in the UK and India,” he added.
Indian Commerce Secretary Sunil Barthwal said on Oct. 20 that negotiations on the draft India-UK trade pact were moving in the right direction and the two sides were expected to reach an agreement soon.
In a free trade agreement, two countries eliminate or drastically reduce tariffs on the maximum number of goods traded between them, in addition to relaxing standards to promote investment and trade in services.
The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was around $32 billion between April 2000 and March 2022.
India’s major exports to the UK include ready-made garments and textiles, gemstones and jewellery, engineered goods, petroleum and petrochemical products, transport equipment and parts, spices, metals, machinery and instruments, pharmaceuticals and marine products.
Major imports include precious and semi-precious stones, metal ores and scrap, engineering goods, professional instruments, non-ferrous metals, chemicals and machinery.
In the services sector, the UK is one of the largest markets in Europe for Indian IT services. Bilateral trade increased to USD 17.5 billion in 2021-22 from USD 13.2 billion in 2020-21. India’s exports amounted to USD 10.5 billion in 2021-22, while imports were USD 7 billion.
Other strategic experts point out that Sunak had not visited India during his time as Chancellor of the Exchequer and is taking over at 10 Downing Street at a particularly tumultuous time so he can focus on ties with New Delhi.
“Rishi Sunak has yet to be tested on foreign and defense policy issues,” says Rahul Roy-Chaudhury, senior South Asia fellow at the International Institute for Strategic Studies (IISS) think tank. ) in London.
“Being born in the UK to parents from East Africa, Rishi Sunak was not a public advocate of strong ties to India during his parliamentary and ministerial tenures.
“Indeed, as Chancellor of the Exchequer for more than two years, he has not visited India once. There is no indication that this perspective is likely to change as Prime Minister when he will have to focus on a much broader foreign and security canvas,” he said.
Meanwhile, Sunak’s commitment to achieving a partnership of equals between India and the UK with two-way talent flows is expected to steer the government away from the former minister’s recent controversial statements. of the Interior Suella Braverman on the Indians as the biggest group of visa overruns – which pushed the FTA negotiations further apart.
“The UK does not have a monopoly on opportunity. There are so many opportunities in India, we also want to make sure that if this living bridge becomes a reality, we need to make it easier for people in the UK to get to India, to study in world-class institutions to go working in all these amazing start-ups,” Sunak said when he was finance minister.
The National Union of Indian Students and Alumni (NISAU) of the UK has called on him to be the Prime Minister who addresses a long-standing issue and removes international students from being counted in the country’s migration figures .
“I hope that Rishi, as prime minister, will champion the exchange of skills and knowledge essential to the growth of our two countries and not pander to the noise of far-right immigration,” he said. UK NISAU Chairman Sanam Arora.
“I sincerely hope Rishi also recognizes the bizarre situation of counting international students as migrants and we call on him to be the Prime Minister who changes that, a move that can be transformative for the UK economy and the healthcare sector. higher education,” she added.
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