India and the UK are planning to launch formal negotiations for a free trade agreement (FTA) by November 1 and hammer out an “interim” pact by March 2022, the commerce ministry said on Tuesday, giving a time-frame for an agreement for the first time. This will be followed up with a comprehensive FTA with the UK, it added. The interim trade pact will likely include not just select goods but also key services that are “immediately deliverable”. Greater market access and tariff cut in select goods will feature in talks.
Similarly, both the sides may also explore the signing of few mutual recognition agreements in select services segments, including nursing and architecture, Goyal said.
Before the pandemic, India shipped out goods worth $8.7 billion to the UK in FY20 and its imports from that nation stood at $6.7 billion. However, bilateral trade dropped to $13.2 billion last fiscal in the wake of the pandemic. India mainly exports textiles & garments, gems and jewellery and certain capital and consumer goods to Britain and imports capital and consumer goods in large volumes as well.
In a meeting between commerce and industry minister Piyush Goyal and the UK’s secretary of state Elizabeth Truss late Monday, both the leaders reaffirmed commitment to further bolstering trade pact.
The negotiations with the UK are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019. Balanced FTAs will also enable the country to achieve sustained growth rates in exports in the coming years. Already, India has set an ambitious merchandise export target of $400 billion for FY22, against $291 billion in FY21.
Goyal said there is “keenness to have an early conclusion of negotiations for quick and early economic benefits to businesses on both sides (India and the UK)”. Substantial work has already been done and extensive stakeholder consultations have been held involving various stakeholders, both public and private.
The meetings of working groups, set up by both the countries for this purpose, are expected to be over by end-September, he added. The bilateral trade talks moved at a faster pace after Prime Minister Narendra Modi declared on May 4 the launch of enhanced trade partnership between India and the UK.