Article:
India’s relations with the United Kingdom have a deep-rooted and illustrious history. Over the years, several significant milestones have shaped this relationship, including the establishment of the Indo-UK Comprehensive Strategic Partnership in 2021 and the creation of the 2030 Roadmap for India-UK Relations. A free trade agreement (FTA) is also on the cards. This article delves into these affairs in greater detail.
Background: India-UK Relations
The relationship between India and the UK extends beyond diplomatic ties. These two nations have a robust business and trade connection as well. In light of the recent Britain Meets India (BMI) Report by Grant Thortan Bharat in collaboration with The Confederation of Indian Industry (CII), the trade between these countries is projected to double by 2030. This optimistic projection is attributed to factors like the proposed free trade pact, investment in technology, diversification of global supply chains, and ease of doing business.
The Proposed Free Trade Agreement
The mooted FTA is anticipated to bolster Indian exports in labor-intensive sectors such as leather, textile, jewelry, processed agri-products, and marine products. It would also significantly impact education, pharma, and healthcare sectors. The UK, on the other hand, is exploring the possibility of reducing tariffs on items like apples, UK-manufactured medical devices, and machinery.
India’s Trade with the UK
The UK is the sixth-largest investor in India, with an estimated cumulative investment of approximately USD 31.92 billion from FY 2000-22. This investment comprises around 5.4% of the total Foreign Direct Investment (FDI) in India. The trade in goods and services between India and the UK amounted to USD 31.34 billion in FY 2022, which is a significant improvement from USD 19.51 billion in 2015.
Recent Developments: India’s Relations with UK
Despite the challenges posed by the Ukraine crisis, the Indo-UK relationship has been ascending positively, manifested by the formation of a Comprehensive Strategic Partnership in 2021. This agreement marked the initiation of the 2030 Roadmap for India-UK relations, primarily outlining bilateral partnership plans. Both countries have also engaged in conversations about defense-related trade and deepening cybersecurity and defense cooperation.
About Free Trade Agreement
An FTA is a pact between two or more nations to reduce barriers to imports and exports. It enables goods and services to be bought and sold across international borders with minimal or no government tariffs, quotas, subsidies, or prohibitions obstructing their trade. It is the opposite of trade protectionism or economic isolationism.
Other Trade Agreements signed by India
India has several other trade agreements in place, including those with Australia (ECTA), UAE (CEPA), Mauritius (CECPA), South Asian Free Trade Area (SAFTA), South Asia Preferential Trading Agreement (SAPTA), and Asia Pacific Trade Agreement (APTA).
Conclusion
The burgeoning relationship between India and the UK has the potential to redefine the global economic landscape. With the proposed FTA and mutual efforts to enhance cooperation, these two nations are charting a path towards a prosperous and sustainable future.