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Sansad TV: Perspective- India-UK FTA





In January this year India and UK had formally launched talks for a free trade agreement to boost bilateral trade and investments. Top govt officials have been quoted by media reports saying negotiations for the proposed trade pact between India and the UK are moving in the right direction and both sides are expected to reach an agreement soon. Both countries share strong bilateral economic relationships with great potential for growth in both goods and services. Strong Indian community presence of over 1.6 million expatriates forming less than 2% of UK’s total population but contributing over 6% in GDP plays an important role in promoting bilateral trade and investment. Investment is the key part of the India-UK Bilateral relationship. Major Indian corporates are present in the UK market and new entrants are increasing. UK has also remained keen on exploring the potential of the Indian market.

Free Trade Agreements (FTAs):

  • Economic theory tells us that FTAs are not always sure-win strategies because these create as well as divert trade.
  • FTAs need to be designed in a manner that they enhance complementarities amongst partners and overcome regulatory hurdles.
  • It has been reported that the FTA will be remodelled into three separate deals—trade, investment and geographical indications (GIs).
  • While the investment deal is seen as a standalone agreement, the one on GIs could be integrated with the trade deal.
  • It may be in India’s interest to ensure that all the three negotiations move in parallel and feed into each other.
  • Since India unilaterally terminated bilateral investment treaties (BIT), including those with the EU member states, the EU appears to be keen to conclude an investment deal that includes Investor State Dispute Settlement (ISDS) provisions.


  • It offers huge benefits for British businesses, workers and consumers.
  • Scotch whisky, financial services and cutting-edge renewable technology are among some of the key sectors set to benefit.
  • FTA normally covers trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.).
  • FTA can also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy, etc
  • The UK has been pushing India for a bilateral trading arrangement ever since it voted to leave the European Union (EU) in June 2016 and left finally in January 2020.
  • However, India had been resisting these efforts as it decided that the Brexit process should complete first.
  • India has been keen to understand how much of a “special and preferential” access the UK will get in the vast European market when it is out of the EU’s single-market dynamics.
  • Strategic Partner: The UK is a permanent member of the UN Security Council, and one of the strategic partners of India.
  • Strengthening bonds with the trade would seek UKs support at global issues like standoff with China in the Ladakh sector of the Line of Actual Control (LAC) and claim for permanent seat at UNSC.
  • UK is a populist nation advocating ‘make my country great again’ and ‘my country first’. Their brand of democratic politics is self-centered and impervious to criticism.
  • Britain has now delivered one that is tariff- and quota-free and allegedly “takes back control over our money, borders, laws, trade, and our fishing waters,” but has potential for friction both with the EU and domestically.
  • India has been fruitlessly negotiating a trade agreement with the EU since 2007, during which Britain was considered the main deal-breaker.
  • Therefore, when the time comes for a discrete agreement with Britain, the two countries may settle for a limited one perhaps covering pharmaceuticals, financial technology, chemicals, defence production, petroleum and food products

Way Forward: