The proposed free trade agreement between India and the UK is inching closer to realisation, reports said on Sunday.
In a bid to protect domestic interests, India has excluded data-related issues and dairy sector concessions from the proposed India-UK free trade agreement. However, the negotiations have taken an intriguing turn as India is considering duty concessions on automobiles and certain confectionery items.
This move aims to strike a balance between safeguarding domestic industries and promoting trade ties.
Negotiations have got a significant boost following the recent visit of Commerce and Industry Minister Piyush Goyal and Commerce Secretary Sunil Barthwal to London, where they held crucial meetings with various stakeholders, including senior British officials.
Under free trade agreements, two trading partners drastically decrease or remove customs tariffs on the maximum number of items exchanged between them, in addition to relaxing rules to encourage trade in services and investments.
Navigating data localization and “Rules of Origin”
UK corporations have expressed worries about India’s data localization regulations. Another official stated that India and the United Kingdom are extremely close to completing discussions for a potential free trade agreement, with both parties trying to iron out disagreements on subjects such as investment treaties, intellectual property rights (IPRs), and rules of origin.
Nineteen of the FTA’s 26 chapters have been closed. Both nations have discussed product-specific requirements, value addition, and certification in their rules of origin chapters.
The ‘rules of origin’ section specifies the minimal processing that must take place in an FTA nation in order for the final finished product to be called as originating products in that country. Moreover, under this clause, a nation that has signed an FTA with India is not permitted to dump goods from a third country into the Indian market simply by labeling them.
To export to India, it must perform a mandated value addition on that commodity. Rules of origin serve to keep items from being dumped. Investment is being discussed separately (as a bilateral investment treaty) between India and the United Kingdom, and it may be finished concurrently with the free trade agreement.
Bilateral commerce between the nations climbed to $20.36 billion in 2022–23, up from $17.5 billion in 2021–22. India’s principal exports to the United Kingdom include ready-made clothes and textiles, gems and jewelry, engineering goods, petroleum and petrochemical products, transportation equipment, spices, machinery and instruments, medicines, and marine items.
India attracted $1.74 billion in foreign direct investment from the UK in 2022–23, up from $1 billion in 2021–22. Investments totaled $33.9 billion between April 2000 and March 2023.
