The India-UK free trade agreement (FTA) would strengthen bilateral ties and also provide stability to investors, former United Kingdom minister Gerry Grimstone told Moneycontrol in an interview.
On July 24, the two sides signed a Comprehensive Economic Trade Partnership (CETP), the formal name for the FTA. Once it comes into effect, the agreement will offer zero duty access to a range of Indian exports, including electronics, textiles, and gems and jewellery, in the UK.
"India and UK have a long-standing relationship. They both have an opportunity today to build further trade and investment ties with the help of the FTA," said Grimstone, a former minister for investment at department for international trade.
"Signing an FTA is only signatures on paper, the more important thing is what happens afterwards."
Grimstone, a currently member of the House of Lords, was speaking to Moneycontrol on the sidelines of Gateway Gulf 2025 in Bahrain.
As part of CETP, India’s average tariffs on British goods will drop from 15 percent to 3 percent, allowing UK companies to sell items such as soft drinks, cosmetics and auto parts more easily in India.
India expects the FTA to double the bilateral trade in 2030 from the present $56 billion.
The pact would provide stability for investors. "Both India and UK have strong legal systems. I am sure, both the countries would want to stick to the treaty, which grants stability," Grimstone said.
At the moment, global trade is going through a very volatile period. "The World Trade Organization (WTO) doesn’t have the force as it did before. It’s early to say what’s going to come out of the present (bilateral trade) arrangements."
But my guess is the world is going to move towards a more bilateral trade system, rather than a multilateral one," Grimstone said.
The FTA will take some time to come into force as Britain has a lengthier ratification process.
On ease of doing business, he said that India should develop a system, where a small team of government officials takes policy decisions, as that would fast-rack policymaking and boost investor confidence.
"The great advantage for a small, centralised country like Bahrain is that it is possible to sit in a room with senior policymakers…so you know exactly who you’re dealing with," Grimstone said.
"I have sat on the board of HDFC Asset Management. My company Standard Life was the original partner with HDFC, both in life insurance and asset management businesses. I don’t think anybody would say that India was a simple country," he added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
