India-UK to sign early harvest deal by March 2022

India and UK aim to launch negotiations on a free trade agreement (FTA) by November this year, expect to sign an interim agreement involving high-priority products and services by March next year, and later conclude a comprehensive agreement, the commerce ministry said.

A tentative timeline for FTA and other trade matters has been chalked out during discussions held between commerce minister Piyush Goyal and UK trade secretary Elizabeth Truss, it said.

Speaking at an industry event on September 3, Goyal said India was negotiating trade agreements with “democracies” that believe in “transparent rule-based trading opportunities” and it was in an advance stage to conclude early harvest under a free trade agreement with UK.

“Proposed FTA between India and UK is expected to unlock extraordinary business opportunities and generate jobs. Both sides have renewed their commitment to boosting trade in a manner which benefits all,” the commerce ministry said in a statement. After Brexit, UK has been pursuing its new trade policy that includes negotiating trade deals with several countries at the earliest.

Speaking on the occasion, Goyal said there is tremendous interest in the business community in both countries about this FTA. After Prime Ministers of the two countries announced the Enhanced Trade Partnership (ETP) on May 4, 2021, both countries have made substantial progress on various aspects of the partnership, he said.

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“Substantial work has already been done and extensive stakeholder consultations have been held involving industry/business associations, export promotion councils, buyers/sellers associations, regulatory bodies, ministries/departments, public research bodies, etc,” the statement said.

Goyal said bilateral working groups (BWGs) for different tracks have been formed to understand ambitions, interests and sensitivities of each other to facilitate accelerated progress during negotiations. The meetings of these BWGs are presently in progress and are likely to be completed this month, he said.

He hoped that these BWG discussions would help both sides in understanding each other’s policy regimes and help both sides to begin their Joint Scoping discussions, beginning on October 1, 2021, for finalising terms of reference for launch of negotiations in November.

Goyal said an interim trade agreement, as a first step of an FTA would allow both countries to immensely benefit from the early gains of the partnership. He emphasised the need to strike a balance between commitments and concessions in goods and services.

In services, certain services of mutual interest may be included in the interim agreement through request offer approach wherein the two countries may include priority sectors that are immediately deliverable. “If necessary, we may also explore signing of few Mutual Recognition Agreements in selective services like nursing and architecture services,” he said.

India is a key economic partner of UK. Merchandise trade between the two countries was $15.45 billion in 2019-20 with the trade balance in favour of India. The ministry of external affairs (MEA) quoting the Department for International Trade (DIT) inward investment statistics for 2019-2020 said India invested in 120 projects and created 5,429 new jobs in the UK to become the second-largest source of foreign direct investment (FDI) after the US in 2019. As per the CII-Grant Thornton India meets UK Report 2020, there are over 850 Indian companies operating in the UK, with combined revenues of almost £41.2 billion.

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