Senior government officials in India and the UK are doing their best to fix notable problems in a bid to seal a flexible industrial agreement (FTA) that has been in the works for two years and is said to be close to completion. very fast. The Model Code of Conduct (CCC), which is expected to be implemented next month, is seen as a deadline, with hectic last-minute talks reaching the Indian government levels across all ministries, including the Ministry of Commerce and the Ministry of Economic Affairs. and the Foreign Ministry to reach a final consensus, a government official said.
The FTA with the United Kingdom would be the first full agreement with a Western country that would see deeper economic integration with a global leader in the facilities sector. However, the window to signal the agreement is definitive with elections in both countries this year. While the general election in the United Kingdom is expected in December this year, the general election in India will most likely be held between April and May this year.
The FTA with the United Kingdom is because it will serve as a model for industrial agreements with more important Western trading partners, such as the European Union and the European Free Trade Association (EFTA). Economic integration with Western countries through FTAs is gaining importance as the global chain of origin expands. They are restarting after COVID-19 and multinational corporations around the world are adopting a China plus one policy. Multilateral industrial agreements such as the Indo-Pacific Economic Framework for Prosperity (IPEF) are also being negotiated in a bid to move away from dependence on China. .
“For us (India), MCC is the limit. Our British counterpart understands that and that is the explanation for why their officials are here and meetings are being held with the levels of government in all ministries, added the Ministry of Trade, the Ministry of Economic Affairs and the Foreign Office,” the official said.
A British delegation arrived in India on 22 January.
“All chapters are closed, but there are some articles left in some chapters. Now it’s a small basket. More than 90% of the deal has been closed. Several issues and chapters have been closed in the last 3 months,” the official added.
The MCC is a code that contains general precepts of style behavior in elections organized through the Electoral Commission (EC). It constitutes a complete bankruptcy on what the ruling party can and cannot do once the elections are called, which prohibits the use of the official apparatus and body of workers for the political achievements of the ruling party.
Thus, the spirit of the MCC also demands that the bureaucracy or any official interact or appear to have interaction in any activity that may gain advantage for the ruling party. In particular, the MCC is only a code of ethics and has no legal backing; the EC, at best, can censor, advise or arrest the user who violates it.
With the date for MCC fast approaching, India is looking to close two other FTAs including the India-Oman Comprehensive Economic Partnership Agreement, the European Free Trade Association with the four nation bloc of Iceland, Liechtenstein, Norway, and Switzerland.
However, the comprehensive industrial agreement with Australia will most likely be approved after the general election, as Australian negotiators seek access to the Indian agricultural market, which is a sensitive sector for India.
While the UK has asked India to reduce duty on cars and whisky among other items, India has sought better access for its service sector workforce in the UK. The final deal could see India lower duty to a greater extent as India is a high tariff country. The average tariff on goods imported from India into the UK is 4.2% but the average tariff in India on goods imported from the UK is 14.6%
Negotiations over cars and whiskey have been controversial, as the Indian industry also seeks to gain greater access to the UK market. Indian whiskey makers have said the UK deserves its three-year maturation rule, which is a hurdle for Indian whiskey brands. They are seeking access to the United Kingdom and are seeking tariff concessions in the automotive sector, specifically in the electric vehicle segment.
India’s labour-intensive sectors are expected to benefit from the India-UK FTA, especially the textile sector. India’s textile exports are subject to price lists of up to 10% in the UK and an industrial deal could put India at a point of play. box with competition such as Bangladesh (which enjoys the advantages of LDCs) and stimulate textile exports. At the same time, further integration of the sector with the UK can contribute to further job creation in this fast-growing sector. .
India and the UK are also contemplating signing a bilateral investment treaty (BIT) alongside the FTA, which could limit UK investment in India. To speed up the settlement of investor-state disputes under the new BIT, India deserves to move away from its 2016 style. a technique that aimed at the depletion of local resources.
In FY2023, India’s product exports to the UK were valued at $11. 41 billion, while imports amounted to $8. 96 billion.