India-UK conclude fifth round of FTA talks

Tags: Economy/Finance International News

India and the United Kingdom (UK) concluded the fifth round of talks for an FTA on the 29th of last month.

Important facts

• In the fifth round of talks, technical experts from both sides came together to discuss 15 policy areas.

• Currently, India is holding FTA talks with some of its trading partners including the European Union, Canada and Israel.

Consensus between both countries

• Officials in India and the UK will continue to work intensively throughout the summer to finalize talks on a comprehensive and balanced free trade agreement by the end of October 2022.

• UK agrees to end duties on Indian rice and textile items.

• India may allow duty-free entry of British apples, medical equipment and machinery manufactured in the UK.

• India initially proposed an early harvest agreement or interim FTA that would be ready by Diwali.

• Through this agreement, India-UK bilateral trade is estimated to double to about $100 billion by 2030.

• An agreement is also expected to be reached on mutual recognition of higher education qualifications.

• India is likely to get more skill visas, as the UK currently faces a shortage of experts in the IT and programming sectors.

• The India-UK FTA agreement is also expected to give a boost to the domestic textile sectors.

What is Free Trade Agreement (FTA)?

• Under this agreement, customs duties, regulatory laws, subsidies and quotas etc. are simplified on the products under import-export between two countries.

• Its main objective is to simplify trade.

• A major advantage of FTA is that the cost of production of the two countries between which this agreement is made becomes cheaper as compared to other countries.

• This encourages trade and gives impetus to the economy.