The landslide victory of the Labour Party over the incumbent Conservatives in the United Kingdom is likely to speed up singing of the free trade deal with India by October.
The Labour Party may give its approval for the India-UK free trade agreement (FTA) with minor adjustments setting the stage for the deal getting signed as early as October this year, Indian think tank Global Trade Research Initiative said in a note on July 5.
"The Labour Party in the UK is expected to recognise the substantial benefits of the India-UK Free Trade Agreement... It will notice that the FTA with India offers a significant price advantage to British exporters, potentially boosting their exports to India almost immediately. For the proof, it can look at the historical precedents, such as the steady improvement in ASEAN, Japanese, and South Korean exports to India following their respective trade pacts with India," GTRI said.
Aided by lower tariffs, the proposed FTA with India is expected to help the UK increase the export of chemicals, transportation equipment, electric and hybrid motor vehicles, and whisky, among others. While, labour-intensive Indian exports such as textiles and footwear may benefit from lower British duties.
However, with the regime change in the UK, a few minor adjustments in the trade pact on matters such as curtailing the number of visas for Indian professionals are likely, said GTRI founder Ajay Srivastava.
Back in May, the UK India Business Council (UKIBC) had said that regardless of who wins the election, they fully expect the UK-India relationship to be positive and increasingly close and that the Labour Party does recognise the importance of concluding the FTA negotiations successfully.
Now, reacting to Labour Party's victory, Richard McCallum, Group Chief Executive Officer of UKIBC on July 5 said, "there is tremendous synergy between the British and Indian economies. By prioritising trade and investment, rapidly concluding the FTA, smoothing the two-way flow of students and workers, and deepening R&D collaboration, we can collectively deliver stronger economic growth in both countries. This will create jobs and prosperity in India and the UK.”
The Labour Party's intention to continue to pursue the FTA with India was clear as their manifesto outlining the programme for the government for the next five years on June 13 mentioned seeking a new strategic partnership with India, including the trade pact.
India and the UK are in talks over the FTA, which was originally slated to be signed during Diwali 2022, for around 28 months now. There are 26 chapters in the agreement, which include goods, services, investments, and intellectual property rights.
The two sides continue to negotiate on a few unresolved issues, including rules of origin, London’s demand for tariff concessions on electric vehicles, and norms about services. So far, 13 rounds of talks have been conducted, with the 14th round still underway.
India and the UK are also looking to iron out disagreements over New Delhi seeking easier mobility norms for its services industry.
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