Promoting Trade in Services
India and the UK are currently engaged in negotiations for a proposed free trade agreement aimed at promoting trade in services. As part of these discussions, both countries are seeking equal treatment for their respective companies in each other's markets. The negotiations, which began on January 13, 2021, have already completed ten rounds, with both sides aiming to conclude the talks at the earliest.
Key Areas of Interest
In the services sector, the UK has shown keen interest in areas such as the financial sector, while India is focused on sectors like education and the movement of skilled professionals. The free trade agreement's services chapter does not include customs duty concessions.
Negotiating National Treatment and Ease of Norms
The two trading partners are negotiating issues related to granting national treatment to Indian and British companies in various sectors, as well as easing norms to promote trade in services. This includes simplifying visa processes for skilled labor and facilitating foreign direct investment in the sector.
Progress and Challenges
Regular meetings at higher levels are held to review progress, address outstanding issues, and discuss the way forward in the negotiations. However, as of now, no concrete agreements have been reached in the services sector, according to an anonymous government official.
UK's Focus on Financial Services
The UK's status as a major global financial services center has led to its strong interest in this sector during the negotiations. Both countries have exchanged lists of services they wish to promote for exports.
Broad Scope of Negotiations
The negotiations cover 26 policy areas/chapters, out of which 14 have been substantially closed for negotiations, indicating significant progress in those areas. Additionally, investment is being negotiated as a separate bilateral agreement, which will be concluded simultaneously with the free trade agreement.
Educational and Professional Contributions
Indian students have surpassed Chinese students as the largest group of foreign students studying in the UK, with a significant increase in granted visas in recent years. Indian nationals also top the list of visas granted in the skilled worker category. Furthermore, Indian professionals make up the highest number of visas granted under the tailored Skilled Worker Health and Care visa, emphasizing their contribution to the UK's National Health Service.
Potential for Trade in Services
The Services Export Promotion Council of India (SEPC) Chairman, Sunil Talati, highlights the substantial potential for further boosting trade in services. Areas of interest for India under the trade agreement include accounting and auditing, legal services, tourism, and engineering and architecture. Talati suggests seeking liberalized visa norms for Indian professionals in these segments.
Bilateral Trade and Investment
Bilateral trade between India and the UK has been steadily increasing, reaching USD 20.36 billion in 2022-23 compared to USD 17.5 billion in 2021-22. India's main exports to the UK include garments, textiles, gems, and jewelry, while imports comprise precious stones, metals, and engineering goods. The UK is the largest market in Europe for Indian IT services and remains a significant investor in India, particularly in sectors such as petroleum, ports, and computer software.
Indian Companies and FDI
Over 700 Indian companies, including the Tata Group, have a presence in the UK. Foreign direct investment from the UK to India amounted to USD 1.74 billion in 2022-23, with total investments from April 2000 to March 2023 reaching USD 33.9 billion.