India and the UK on Thursday formally launched negotiations for the proposed free-trade agreement, which is expected to double bilateral trade, from the current USD 50 billion, by 2030.
India has recalibrated its demands for relaxation of norms for the services sector under a free-trade agreement (FTA), making it more broad-based while negotiating such trade deals, instead of focusing only on easy visa for its professionals, Commerce Secretary BVR Subrahmanyam on Thursday said. Earlier, he said India was getting completely focussed on easy visa norms for its professionals in a free trade pact. “On visas for individuals, I think there has also been a change and a re-caliberation in our own asks as far as services are concerned. We were getting completely focussed on what in services is called Mode 4 (movement of professionals). Mode 4 meant, we need visas, visas, and visas. What we are actually seeing globally is that Mode -4 is something you (India) are getting autonomously, whether or not there is FTA,” he told reporters here. He said the country has a youthful population, highly skilled population, people around the world want IT professionals, lawyers, doctors, nurses and CAs.
“They are anyway taking your people. So rather than getting focussed on a single item, we are broad-basing our services request…I think we will have far more access in newer areas and I am sure that even in this FTA (with the UK), there will be some gains for us in the movement of people,” he told reporters here. India and the UK on Thursday formally launched negotiations for the proposed free-trade agreement, which is expected to double bilateral trade, from the current USD 50 billion, by 2030. The secretary said this while replying to a question that one of the drawbacks of FTAs in the past is the inability to get visas or secure visas for people. Recently, British Prime Minister Boris Johnson sought to dismiss the notion that visa norms are set to be relaxed for Indians in pursuit of an FTA with India. During the weekly Prime Minister’s Questions (PMQs) session in the House of Commons, Johnson was asked by one of his Conservative Party MPs to comment on reports that emerged in the UK media over the weekend about easier visas for Indian professionals and students to make an FTA more attractive to India.
Commenting about interest areas in the services sector for India in the FTA with the UK, he said areas such as telecom, IT, travel and other business services hold good potential. “Our exports of other business services stand at USD 4 billion and the expectation is that this will go up to USD 20 billion. This could be anything — consulting, accounting and back-office work. It is a large area of growth we are looking into,” he added. About goods, he said that sectors that hold maximum potential include fish, shrimp, textiles, apparel, chemicals, footwear, cereals, iron and steel, gems and jewellery, and pharma products. “I see an increase or upside of about USD 35 billion in exports in the next 10 years. That’s huge, considering our exports are less than USD 10 billion today,” he said adding India will target these in the interim agreement.
As India’s large population is dependent on agriculture, agri products and dairy will be “carefully watched” items. “Farmers and MSMEs, we will be slightly concerned with. England is not a high power agriculture powerhouse. So, they are not going to have that kind of pressure for agriculture,” he said. Further, the secretary said if India has to be part of “new-age” FTAs, it needs to negotiate on all fronts. “The diffidence which was there in the past is not there anymore. However, it does not mean we will embrace everything as it is,” he said. He added that India and the UK are discussing 16 areas, including intellectual property rights, sustainability, competition, digital, women, MSMEs, anti-corruption and innovation. “A lot of these areas are new areas for us… We may not be having either capacities or depth of knowledge or experience… (But), if you do not actually talk about these things then nobody is going to enter into FTAs.
“India is probably the only large economy in the world that is not part of the large FTA or a regional trading arrangement. You are getting shut out of market after market after market. The US, EU are a common market, it is an FTA in itself, the rest of Asia has got RCEP (regional comprehensive economic partnership agreement),” he said. “Where are we? We are standing splendidly isolated. And it is not a question of who is going to gain or lose. It is not us gaining vis-a-vis the UK. It’s us losing vis-a-vis Bangladesh, Vietnam. I think that is the biggest question,” he added.
India is in a trade surplus situation with the UK in both goods and services but if these little tariff barriers were not there in the UK, India’s exports instead of USD 9 billion will be somewhere in the range of USD 35 billion, the secretary said. He added, “You are not competing with the UK in the UK market. You are competing with Bangladesh, Vietnam and China in the UK market. If they have better access, you are shut out. I think that’s what we are planning to open.”
“If you do not talk on a whole range of subjects, you will not have an FTA. We are doing that with the EU and even with the UK. Secondly, there is nothing to worry about, because a lot of these things are best endeavour agreement. All of them are not going to be the enforceable agreement, he informed. Explaining it further and citing an example, he said the anti-corruption issue is going to be about transparency, and keeping documents/tenders in public. Similarly, MSMEs are more about promoting their exports and creating a facilitative environment for them to get greater market access. “There is nothing harmful there. These new-era FTAs are good for India,” he said.
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