Indian trade chief sees 'a lot of opportunity' from Brexit
19 July 2017. By Jennifer Freedman
The UK's planned exit from the EU creates "a lot of opportunity" for India, particularly in the areas of investment and market access for both goods and services, says Indian commerce minister Nirmala Sitharaman.
"We see a lot of complementarity between the UK and Indian economies," Sitharaman told an event* in Geneva yesterday after meeting with World Trade Organization chief Roberto Azevêdo. "Many Indians have already invested in the UK, which they saw as a steppingstone to the EU."
According to figures from the High Commission of India London, India is the third-largest investor in Britain, and Indian businesses have invested more in the UK than the EU's other 27 members put together. More than 800 Indian companies with combined revenue of 47.5 billion pounds ($62 billion) operate in the UK. Britain is also the G20's second-largest investor in India.
"We have a lot to do with the UK, and would be happy to start working" to strengthen relations, Sitharaman said.
India is vital to the UK government's plan to show that it can clinch trade accords with non-EU countries — especially nations such as India, with strong historic ties, fast growth and 1.3 billion consumers. Indeed, Prime Minister Theresa May's trip to India last autumn was her first to a non-EU nation following the referendum in favor of Brexit.
Commerce between the two economies surged 170 percent between 2004 and 2014 — though India's overall trade grew 800 percent in that period. In 2014-2015, bilateral trade actually slipped about 8 percent.
A UK-India trade deal would boost bilateral commerce by 26 percent, according to a Commonwealth Secretariat report.
The April report found that British exports to India — goods such as mineral fuels and oils, gems and precious metals, and electronic machinery — would climb 33 percent a year if they secured a free trade agreement.
"If India and the UK decide to enter an FTA and bring down their tariffs to zero, it is likely to have a greater impact on India than the UK," the report said. "India's imports from the UK are estimated to increase from $5.2 billion to $7.8 billion, i.e. almost a 50 percent rise per annum if there was an India-UK FTA post-Brexit."
Liam Fox, the UK's international trade secretary, said last August that the two countries' "current trading relationship is strong but, more importantly, there is so much future potential."
Formal negotiations on a trade deal — in which India would presumably seek more access for information technology-enabled services, business process outsourcing and knowledge process outsourcing services — can't begin until after the UK leaves the EU in March 2019.
"We have to wait until the actual exit" to start talks, Sitharaman said, though both sides are already studying the potential outlines of a deal. "An informal committee has been formed after the visit of Theresa May, and it's looking at opportunities and challenges that exist between Indian and UK trade relations."
Indian Finance Minister Arun Jaitley said in February that while there was "great enthusiasm" for a bilateral trade deal, any discussions would have to run "in parallel" with his country's negotiations with the EU.
The EU and India began trade talks in 2007, but discussions stopped in 2013 due to wide differences in areas including intellectual property rights for drugs, European labor standards and agricultural subsidies, and the bloc's efforts to halt counterfeit products. They aren't expected to resume any time soon.
* "Reclaiming multilateralism," Graduate Institute and Permanent Mission of India to the WTO, Geneva, July 18, 2017
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