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Question:  India-UK Free Trade Agreement (FTA) will bring a new dawn for bilateral relationship between the two countries. Explain the significance of FTA for India.

 

Answer:  India and UK are negotiating a FTA in form of an early harvest deal. The FTA is an instrument to ease trade restrictions and realize the goal of open markets. India currently is negotiating FTA with many other countries such as Canada and Israel.

Role of FTA in Indo-UK ties

  • Tripling bilateral trade
    The bilateral trade between the two countries is currently very low. The FTA will triple the existing trade amounts and benefit both countries.
  • Increasing market access
    Only some Indian products find acceptance in UK due to high taxes. The FTA regime will make many other Indian products competitive in UK market.
  • People to people ties
    Trade can be a prelude to cultural exchange between two countries. The movement of people will enhance the already good ties between citizens of both the countries.

Importance of FTA for India

  • Expand market
    India’s export markets are currently concentrated in Middle East and USA. The changing situation has provided India an opportunity to expand to UK after its exit from EU.
  • Increase domestic production
    Indian domestic manufacturing and production is necessary to create jobs and assets. It should not be over dependent on domestic consumption alone.
  • GDP growth
    India aims to become a $5 trillion economy in the upcoming years. This is possible if its exports in form of trade grow at a higher rate.

Thus, the FTA may not be that simple to come into existence. There are many conflicting fields that have to be negotiated for arriving at a full deal.

Updated on 22 Jan 2022 |   Added on .19 Jan 2022  |  by admin