Rishi Sunak is really going to give good news to India as soon as he becomes British PM? Will FTA flights fly now?
Highlights
- Free trade agreement signed to boost investment of $100 billion by 2030
- Bilateral trade in goods between India and the UK stood at $16 billion in 2021-22
- In 2021, India was the 15th largest trading partner of the UK
There is an atmosphere of happiness among people of Indian origin after Rishi Sunak was appointed as the British Prime Minister (PM). But this happiness is not only about his being of Indian origin, but also about his thinking about relations and business with India. Sunak has been a supporter of the Free Trade Agreement recently signed between India and Britain. In such a situation, the hope of India-UK bilateral trade deal hanging in the balance during the tenure of Lis Truss has increased manifold.
What is Sunak’s opinion about FTA?
There are reports in the media in India that hopes of a much-needed boost to bilateral ties have risen. Indeed Sunak had earlier told an Indian English-language daily that he was ‘strongly committed to a UK-India Free Trade Agreement (FTA) to create jobs on both sides and for India to liberalize its consumer financial services industry’ ‘ Huh. Sunak had said that the United Kingdom can provide climate finance facilities to meet India’s net zero ambition.
trade between the two countries
| 2021-22 | 16 billion dollars |
| 2020-21 | $13.11 billion |
| 2019-20 | 15.45 billion dollars |
| 2018-19 | $16.87 billion |
| 2017-18 | $14.49 billion |
PM Modi talks about 2030 roadmap
PM Narendra Modi tweeted: “Heartfelt congratulations @RishiSunak! You are the new PM of the UK, so I look forward to working closely with you on global issues and implementing Roadmap 2030. As the new identity of UK Indians. In wishing you a special Diwali, we are about to write new chapters in our modern partnership.”
What is FTA
Under the FTA agreement, two countries eliminate or significantly reduce customs duties on the maximum number of trades between them, in addition to easing norms to promote trade in investment and services.
What is free trade agreement between India and Britain
India and the UK in January this year formally started talks for a free trade agreement to boost bilateral trade and investments worth $100 billion by 2030. Bilateral trade in goods between India and the UK stood at $16 billion in 2021-22, as compared to $13.11 billion in 2020-21, a year-on-year jump of 22.17%. Exports of $ 9.43 billion were made in 2021-22, while imports of $ 6.59 billion were received in the same year. This gives a trade balance of $2.84 billion in FY 2021-22.
India is the 15th largest trading partner of the UK
In 2021, India was the UK’s 15th largest trading partner, and the UK is India’s 18th largest trading partner, with manufacturing exports accounting for over 90% of India’s exports to the UK. India’s main exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, metal products, machinery and equipment, pharma and marine goods. Major imports include precious and semi-precious stones, ores and metal scrap, engineering goods, professional equipment, non-ferrous metals, chemicals and machinery. In the services sector, the UK is one of the largest markets in Europe for Indian IT services.
What is in demand in FTA
- Besides goods and services, India wants movement of skilled workers and data adequacy conditions, while the UK wants duty concessions for whiskey and scotch, imported automobiles, apples, pears, quince and lamb meat.
- India also seeks resolution of regulatory issues in the pharmaceutical sector and duty concessions for textiles, footwear, leather products, basmati rice. The UK wants greater access to medical equipment and legal, accounting and financial services.
Diwali was the deadline
The then British Prime Minister Boris Johnson and Indian counterpart Narendra Modi met in April, where they set the ambitious target of signing a free trade agreement (FTA) by Diwali on October 24. However, UK Trade Secretary Cami Badenoch – who took over under the Liz Truss government in September – recently confirmed that negotiators are now focusing on the quality of the deal rather than the timeline.
What are the bottlenecks in FTA
Key points in finalizing a deal include heavy import duties on British whiskey for sale in India and India’s demand for more visas for Indian students and businesses. The talks are believed to have dealt a serious blow to the Indian government earlier this month after UK Home Secretary Suella Braverman’s comments questioning the action on visa overstay from India came down heavily on the Indian government. In addition to more visas, India wants to increase exports of leather, textiles, jewelery and food products to the UK, while the UK is keen to sell more whiskey to India and wants to reduce the import duty of 150%. Reuters reported earlier this month that Indian carmakers had proposed reducing the tax rate on imported cars from 60% to 100% as part of a trade deal with Britain.
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