MIGHT AND GLORY

AN UPCOMING FTA WITH THE UK MAY OPEN DOORS TO SIMILAR DEALS WITH WESTERN NATIONS, BUT INDIA WILL HAVE TO PLAY ITS CARDS WELL

This Diwali when British Prime Minister Rishi Sunak visits India, he may bring more than festive wishes to his country of origin.

The India-UK Free Trade Agreement (FTA) is likely to be signed during the visit, bringing cheer to the uber-rich in India as it is set to more than halve the prices of premium scotch whiskies as well as marquee luxury cars such as Bentley and Rolls-Royce.

It may also ease the travel and visa woes of lakhs of Indians who want to work in the UK while further opening up the British market for Indian services.

More importantly, the India-UK FTA would mark a new era in India’s trade and open doors for FTAs with developed western nations. It could include non-trade issues like environment, labour, intellectual property rights, digital trade, government procurement, competition and gender in the FTAs, creating opportunities and challenges.

THE RATIONALE

To achieve the $2-trillion export target by 2030, India’s active participation in global value chains (GVCs) is essential. Today, 70% of the global goods and services exports come from GVCs, which require close trade cooperation, lower duties, and efficient customs administration.

An FTA ensures increased trade cooperation and lower duties. Additionally, new-age areas like digital trade are being included in FTAs since digital technology continues to disrupt and transform GVCs by lowering entry barriers, increasing transparency, and facilitating collaborative networks.

Now, India is actively negotiating FTAs with the UK, the EU, and Israel, while a deal with Canada is pending due to ongoing political tensions.