Addressing the National Export Summit of CII, Union Commerce Minister Piyush Goyal said that India will ‘wait and watch’ the ongoing changes.
As the UK Prime Minister Liz Truss demitted her office within 45 days under huge pressure and financial uncertainties, India yesterday clarified that the proposed talks on Free Trade Agreement (FTA) is well on track but New Delhi needs to ‘wait and watch’ the ongoing political changes in the country.
While the Conservative party in the UK is on its toe to fix the crisis through electing the next Prime Minister soon, Indian commerce and industry minister Piyush Goyal said, “We will have to wait and see...what happens, whether they have a quick change of the leadership, whether it goes to the whole process...So let us see who comes into the government and what their views are. It's only after that we will be able to formulate a strategy vis a vis the UK.”
However, addressing the National export summit of Confederation of Indian Industry (CII), Goyal added that politicians and businesses across the board in the UK recognised that it is "very" important for them also to do an FTA (free trade agreement) with India.
Referring to the proposed trade pact he noted that it should be fair, equitable, balanced and must be win-win for both the sides. Retaining his hopes on the possibilities of the trade deals he noted, “So we will have to wait and watch. But I would believe that our FTAs with the UK, Canada, EU, one or two more we may announce soon, all that is well on track.”
Since the resignation of Truss yesterday there have been media buzz around the word Free Trade Agreement (FTA) and India’s interests. It is now really necessary to look at what is FTA? What benefits it can give to India? Does India have existing FTAs with other countries? Here is all you need to know.
Free Trade Agreements or FTAs among two or more countries mean that the countries engaged in it will reduce or eliminate the customs tariff and non-tariff barriers on substantial trade between them.
Normally FTAs cover within it agricultural and industrial products along with trading services like banking, trading, construction etc. It can also address within its limits other broader areas such as intellectual property rights (IPR) , government procurement and competition policy.
Most of the countries prefer FTAs over other multilateral trade agreements as it gives them a preferential treatment to enter the market of the target country.
For example, ASEAN has FTA with India but not with Canada. Now, for Indian shoe makers who want to expand its businesses across the ASEAN countries, there is no custom duty. However, a Canadian exporter has to pay 20% extra as the custom tariff.
This gives India a competitive advantage over its Canadian counterpart.
India has preferential access or FTA with around 54 countries. India had earlier signed significant bilateral trade agreements under the titles of Comprehensive Economic Partnership Agreement, Comprehensive Economic Cooperation Agreement, Preferential trade agreement with around 18 global confederations.
A Report of Deloitte titled ‘India-UK Free Trade Agreement: The Time has Come’ appreciates India’s FTA endeavours and notes that India has the maximum number of FTAs operational or under process among Asian countries. In reference to the ASEAN-India, India-Japan and India-Korea trade agreements, it notes that in the metal, textile, machinery, cement and gems, notable concessions are being given to the exporters.
The process of FTA with the UK started in January, 2022 and was expedited during the former Prime Minister Boris Johnson’s visit during April.
However, apart from Johnson, Truss also as the foreign trade minister batted for strong business ties with India. In last year May, she signed off India-UK Enhanced Trade Partnership (ETP) on behalf of the Johnson government.
Locating India’s importance she marked India as “big opportunity” and said that both the countries are “in a sweet spot of the trade dynamics that are building up”.
“We are looking at a comprehensive trade agreement that covers everything, from financial services to legal services to digital and data, as well as goods and agriculture. We think there is strong possibility for us to get an early agreement, where we lower tariffs on both sides and start to see more goods flowing between our two countries,” Truss said after signing ETP, further boosting the probability of an early FTA with India.
During her Presidential campaign she also mentioned that by end of the year she would sign off the FTA pack.
Now, amidst the political conundrum in the UK politics, it is a matter to observe what stance her successor will take regarding FTA with India.