Indian Prime Minister Narendra Modi (left) and UK Prime Minister Borris Johnson (right).
With the UK keen on signing a bilateral trade pact soon, India has pushed hard for the removal of tough visa regulations restricting hiring by Indian firms in Britain, asked the UK to instill measures to boost more outward Foreign Direct Investment flows and dismantle practices limiting drug manufacturing by Indian firms based in Britain, as the first steps to close a proposed bilateral trade pact, according to sources.
Earlier in February, both governments laid stress on creating an Enhanced Trade Partnership (ETP) as the first step to achieve a full Free Trade Agreement between both nations after a meeting between Commerce and Industry Minister Piyush Goyal and his British counterpart Secretary of State for International Trade, Elizabeth Truss.
Set to be launched during the visit of UK Prime Minister Boris Johnson sometime later in 2021, the partnership will lay out specific steps to remove non-tariff barriers to trade, rather than focus exclusively on how to reduce import duties for high value traded goods between the two countries, a senior official in the know, said.
“The UK-India Joint Economic Trade Committee (JETCO) meeting held in July 2020 continues to be seen as a road map to such an agreement. Narrowing down the list of sectors, the three priority areas currently agreed by both governments to be in focus within the ETP are pharma, food & beverage, and IT & fintech. In return, the government is assessing ways to reduce the lengthy process of securing a large list of permits and certifications necessary to do business in India, which remain the main gripe of British companies,” he added.
With information technology and related professional services outpacing all other exports from India to the UK, the government wants to secure concessions in services trade. Easier movement of Indian services professionals along with a more open visa regime has been strongly pursued by India.
New Delhi has also put its weight behind the pharma and healthcare industry which operate in the UK, hoping to leverage the growing demand for Indian pharma exports to Britain and the European Union.
“While the cost of securing patents in the UK is prohibitively high, the registration process for new companies is lengthy and includes a series of repeat inspections of manufacturing facilities which have held up new investments,” a senior functionary of industry body Confederation of Indian Industry said.
Meanwhile, the UK has flagged issues faced by British companies in India, in dealing with state-specific regulations related to alcohol. Apart from higher taxation for foreign entities, which it has called discriminatory, restrictions on pricing and labeling have also been pointed out, sources said.
The UK has also focused on market access issues, insisting on greater access for high value British goods like wine and automobiles, and more ease of doing business through easier approvals for British investments in India.
While officials did not put a fixed date on Johnson’s arrival to India, the British prime Minister has extended an invitation to Prime Minister Narendra Modi to attend the G7 Summit, now expected to take place between June 11-14 in the United Kingdom.
Both leaders are expected to meet on the sidelines for talks, with bilateral trade being on the top of the agenda apart from the global distribution of COVID-19 vaccines, a senior diplomat said.