The Indian Express - 14 January 2022
India, UK kick off FTA talks, will avoid ‘sensitive issues’
Looking to double the trade between India and the United Kingdom (UK) by 2030, the countries launched formal Free Trade Agreement (FTA) negotiations on Thursday, which they hope to conclude by the end of the year.
Bilateral trade between the countries is worth about $50 billion per year. Commerce Minister Piyush Goyal said both countries had agreed to avoid “sensitive issues” and focus on areas where there is more complementarity. The agriculture and dairy sectors are considered sensitive sectors for India in trade talks. Goyal and UK Secretary of State for International Trade Anne-Marie Trevelyan said the countries will also look at concluding an interim or early harvest trade agreement over the next few months. He said a trade deal with the UK could boost exports for large job creating sectors such as textiles, leather goods, and footwear.
“Through our commitment to a new and transformational comprehensive strategic partnership, and the 2030 roadmap for future UK India relations, we aim to double trade between our countries by the end of this decade,” Trevelyan said. When asked if there were any key issues that India felt were necessary for a trade deal to materialise, he said, “Nothing is necessarily a deal-breaker in this agreement.” Goyal added relaxation of visa restrictions, which has been a key issue for India to boost services trade, was not a “a pressing or an overriding demand” and that neither side had any demands that were deal breakers or considered to be “a must” for an agreement.
Commerce Secretary B V R Subrahmanyam said the two countries would aim to conclude an early harvest trade agreement by Easter. “I would say in the interim (agreement), we’ll reach about 60-65 per cent of coverage for goods. By the time we reach the final agreement, we will looking at 90 plus percentage coverage of goods,” Subrahmanyam said, adding the interim agreement would also likely deal with trade in 50-60 services of a total of 160.
Subrahmanyam noted that even though the UK imposed small tariffs on most goods, it made a major difference to the competitiveness of a number of Indian products including textiles.
Interim agreements, which reduce tariffs on some products, can however in some cases lead to significant delays in achieving comprehensive FTAs.
India, in 2004, signed an interim trade agreement with Thailand to reduce tariffs on 84 goods, but the agreement was never converted to a full-fledged FTA.
Early harvest agreements that do not graduate into full FTAs can also face challenges from other countries at the World Trade Organization as WTO rules only permit members to give preferential terms to other countries if they have bilateral agreements that cover “substantially all the trade” between them.