India and the U.K. initiated steps to deepen trade and investment ties even without a Free Trade Agreement (FTA), commerce secretary Rita Teaotia said on Tuesday.
India would seek greater market access in the U.K. for goods, including generic drugs and services such as IT/ITeS and healthcare through a bilateral FTA as well, she said.
Negotiations on the proposed India-U.K. FTA would begin only after Britain completes the formalities for withdrawal from the European Union (EU) by around 2019. She added that in the absence of an FTA, India and the U.K. would have to address the constraints inhibiting the development of bilateral trade and investment relations.
Meanwhile, India would attempt to conclude talks for an FTA with the EU, Ms. Teaotia said while speaking at a seminar titled, ‘Brexit: Prospects for an India-UK FTA’.
The proposed FTA is aimed at further opening up trade in goods and services as well as liberalising investment policies.
Tie-ups in healthcare sector Stating that Indian generic drugs and hospitals can help Britain in reducing healthcare costs and making the system in that country more affordable, Ms. Teaotia said both the nations will gain if the U.K. National Health System procures generic drugs from India and if British insurance companies recognise the relatively low-cost treatment in India's globally accredited hospitals.
Referring to Britain's restrictions on intra-company transfers and on the movement of foreign skilled workers and professionals for short-term work, the commerce secretary said the U.K. should make a clear-cut distinction between the temporary movement of skilled workers or professionals and immigration.
However, she added that there was optimism regarding the future of India-U.K. ties.
Pointing out that the negotiations on the proposed India-EU FTA have been stuck on issues including the EU's demand for greater market access in India for its automobiles and wines and spirits, as well as on India's demand for 'data security status' for its IT sector in the EU, Ms. Teaotia said many of these issues are likely to crop up in the FTA talks with the UK as well.
"We hope that in the (FTA) negotiations, the U.K. will be more flexible and constructive so that the FTA will be beneficial for India as well," she said.
More gains for the U.K.? Meanwhile, a study by Rashmi Banga, titled, Brexit: Opportunities for India, hasestimated that an India-U.K. FTA will increase bilateral trade by 26 per cent per annum. However, indicating more gains for Britain from the pact, the paper said the U.K.’s exports to India will increase by 33 per cent annually while the UK’s imports from India will only increase by 12 per cent.
"A plausible reason for there being a higher increase in the number of exports from the U.K. to India than the number of imports to the UK from India is that India (currently) imposes higher tariffs than the UK does," the paper said.
The proposed FTA aims to increase goods trade by drastically reducing or eliminating duties.
Noting that Indian firms are the second largest creator of employment in the U.K., Ms. Teaotia said there were huge complementarities between both the countries, adding that India needs to look at enhancing the gains in the U.K., a country with GDP worth around $3 trillion.