Thursday, 10 Oct, 2024
By: Yash Gupte
A Free Trade Agreement (FTA) is an agreement between two or more countries to eliminate trade barriers. Image Source: IANS
India and the UK reaffirmed their commitment to advancing their financial services cooperation, building on one another's advantages and fostering shared goals for financial inclusion and sustainable development.
The G20 Summit at Bali, Indonesia held on November 16, 2022 was the first instance when Prime Minister Narendra Modi met Rishi Sunak, the PM of the United Kingdom. Both the leaders carried out discussion to enhance trade between the two countries. This was the first in-person meeting between the two, since Mr. Rishi Sunak took over as the Prime Minister of United Kingdom. Since then, PM Modi has shared warm and cordial relations with his UK counterpart. This was also visible during the recently concluded G20 Summit in New Delhi. The G20 summit in India’s capital is being considered as a historic one as the African Union became a full-time member of the G20 and also the ‘New Delhi Declaration’ was adopted with 100 percent consensus.
The India-UK virtual summit held in virtual mode on May 4, 2021 was a turning point in India-UK relations as the PM of India, Narendra Modi and the then PM of UK, Boris Johnson agreed to a new and transformational India-UK Comprehensive Strategic Partnership and also India-UK roadmap to enhance cooperation for the next ten years. Enhancing this relationship and developing trade relations between both the countries, India and UK held the 12th round of Ministerial India-UK Economic and Financial Dialogue in New Delhi on September 11, 2023.
India and the UK reaffirmed their commitment to advancing their financial services cooperation, building on one another's advantages and fostering shared goals for financial inclusion and sustainable development. The actions being carried out by India to encourage financial services and investment in GIFT IFSC and the UK's promise to support the same were viewed with optimism. The discussion also centered on improving information sharing, collaboration, and assistance between India and the UK to advance infrastructure development priorities, a strong FinTech partnership, and sustainable finance goals for sustainable growth.
Additionally, both parties discussed ways to improve their mutual collaboration on macroeconomic and multilateral concerns. In order to boost India's National Infrastructure Pipeline, the two nations unveiled the India-UK Infrastructure Finance Bridge, a cooperative endeavor. The acceptance of the Joint Statement by the Union Finance Ministers of India and the United Kingdom marked the end of the dialogue.
The meeting was also attended by the representatives from Ministry of Finance, Ministry of External Affairs, Reserve Bank of India, Securities and Exchange Board of India and International Financial Services Centres Authority with representatives from UK Treasury, Bank of England and the Financial Conduct Authority.
Source: Department of Commerce, Ministry of Commerce and Industry
The Financial Year 2022-23 was the most favourable year for the India-UK trade as the total bilateral trade between New Delhi and London was recorded at $17.47 billion. It can be noted that India has a trade surplus with UK. India exported goods worth $10.46 billion to UK in the Fy2022-23. United Kingdom is the 6th largest inward investor in India with an equity investment of $32.28 billion (April 2022-September 2022), accounting for around 5.3 percent of all foreign direct investment into India. The proposed Free Trade Agreement is anticipated to increase Indian exports in labor-intensive industries including education, pharmaceuticals, and health care as well as leather, textile, jewelry, processed agro-products, marine products, and textiles. The UK is likely to consider lowering taxes on goods like apples, machinery, and medical devices made in the country.
Regarding the FTA, according to a statement from the U.K. PM's Office, Mr. Sunak reaffirmed the U.K.'s desire to "deliver a landmark trade deal that benefits businesses and workers in both countries and expand trade in both goods and services."
A Free Trade Agreement (FTA) is an agreement between two or more countries to eliminate trade barriers. Under a free trade policy, there are little to no government tariffs, quotas, subsidies, or prohibitions that prevent the exchange of products and services across international borders. The idea of free trade is the antithesis of economic or trade protectionism.
India’s major exports to UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, manufactures of metals, machinery and instruments, drugs & pharmaceuticals and marine products. In the services sector, the UK is the largest market in Europe for Indian IT services.
One of the UK's post-Brexit ambitions as it pursues a larger role in the Indo-Pacific is a trade agreement with India. The U.K.'s Indo-Pacific "tilt," which has attracted significant interest worldwide, centers on India. London has a stronger voice in the Indo-Pacific area thanks to agreements like AUKUS and free trade agreements with nations like India. The U.K. is now giving its post-Brexit foreign policy a direction and goal with its Indo-Pacific tilt and it is because of this prioritization that New Delhi and London now have the opportunity to quickly complete their Free Trade Agreement.
