Australia-India trade deal – how it compares to UK ambitions with India
India has signed its most ambitious trade agreement yet – with Australia. But how does this deal compare with UK’s ambitions for a trade deal and how will it benefit businesses?
The UK and India have now finished the third round of negotiations of the India-UK Free Trade Agreement (FTA), after 60 separate sessions covering 23 policy areas – set to include key benefits in areas such as investment, climate, health and defence.
With an estimated £23 billion of trade between the UK and India, the business community is undoubtably eager to unlock the potential benefits of a comprehensive FTA – so, what will it look like when the ink is dry? To better predict where we may see ambitious progress, we have identified two key areas addressed by the Economic Cooperation and Trade Agreement (ECTA): India and Australia’s newest FTA.
Reduction of trade barriers
Currently, only 3% of products exported to India from the UK are tariff-free. A removal of tariffs on British imports would increase market access and price competitiveness for British products, strengthening industries across the UK, and supporting domestic job creation.
With increased transparency and lowered market access costs, SMEs stand to benefit in particular from a negotiated FTA with India, contributing to a UK-wide levelling up.
Under the ECTA, 85% of Australian exports to India will be tariff free – over the next 10 years, tariffs will be further reduced on a range of Australian exports, like fruits and vegetables, pharmaceutical products and medical devices, wine, and wood products. The ECTA also acknowledges the barriers that aren’t tariff-related but still disrupt smooth trading– and both countries have agreed to work on these going forward.
Professional Services
Investor confidence was raised as an area of concern in the UK Government’s initial FTA consultation, although, as no solutions were mentioned, a future FTA would need to be clear on protections.
As the world’s second largest services exporter, UK firms stands to benefit from reduced regulatory friction and increased collaboration across both markets.
The ECTA provisions provide greater certainty and transparency for Australian financial service providers operating in India, in addition to a 49% foreign equity for a range of Australian banking and insurance services – a rate higher than any other FTA India has so far negotiated.
Additionally, the ECTA Trade in Services chapter contains an ambitious roadmap of potential provisions for SMEs navigating India’s regulatory system. This mandates transparent and reasonable fees, acceptance of electronic applications, and not requiring physical presence for taking forward an application.
What is the CBI’s role in negotiations?
The CBI engages closely with in-market chapter leads and trade teams at the Department for International Trade, including with the UK Chief Negotiator for the UK-India FTA, Harjinder Kang.
We regularly host virtual working groups to help inform the government’s negotiating approach and share insight on how to navigate trade barriers in the market.
The fourth round of UK-India FTA negotiations are due to begin in June 2022, hosted by the UK – and the CBI wants to keep you in the loop of any updates.
Speak to Hemi or Bella if you’re UK-based.
Speak to Sakshi if you’re India-based.
