The UK and India have concluded negotiations on a Free Trade Agreement (FTA) after two years of discussions, marking a significant milestone in their economic relationship. Prime Minister Narendra Modi expressed his enthusiasm for the agreement, stating, “This landmark pact underlines our commitment to boosting economic progress and creating opportunities for our youth.” He further emphasized the potential for increased prosperity and mutual growth as ties with the European Free Trade Association (EFTA) nations strengthen. The pact follows nearly 16 years of negotiation efforts.
In this FTA, India has agreed to reduce most import tariffs on industrial goods from the four EFTA countries in exchange for investments spanning a 15-year period. These investments are anticipated to be directed across various sectors such as pharmaceuticals, machinery, and manufacturing. The EFTA hailed the agreement for improving market access and streamlining customs procedures, which will facilitate expansion opportunities for businesses from both India and the EFTA nations.
The next steps involve the ratification of the agreement by both India and the four EFTA countries. Switzerland aims to complete its ratification process by the following year. Notably, India is on the brink of general elections, with Prime Minister Modi vying for a historic third term in office. Over the past two years, India has also inked trade deals with Australia and the United Arab Emirates.
Despite optimism regarding the FTA, challenges remain, especially concerning the timing of its implementation vis-à-vis India’s electoral calendar. UK’s trade minister Kemi Badenoch acknowledged the possibility of finalizing a free trade deal before India’s elections but conceded that it would be a formidable task. She remarked, “I suspect that that is not necessarily going to be the case because I don’t want to use any election as a deadline.” This statement underscores the complexities associated with aligning trade negotiations with political timelines.
