Roving Periscope: India-EFTA deal on Sunday; likely with the UK after LS polls
Virendra Pandit
New Delhi: While India is set to sign a free trade agreement (FTA) with a group of four European nations on Sunday (March 10), its much-awaited deal with the United Kingdom is likely to be inked only after the Lok Sabha elections in April-May 2024.
India and the European bloc EFTA will sign a free trade agreement on Sunday to boost two-way trade in goods, services, and investments. These four European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
The Union Cabinet approved the pact received on March 7. The deal is expected to bring investments worth USD 100 billion to India in the next 15 years and create a million job opportunities.
India and EFTA have been negotiating the pact, known as the Trade and Economic Partnership Agreement (TEPA), since January 2008, to boost economic ties.
The agreement has 14 chapters, including trade in goods, rules of origin, intellectual property rights (IPRs), trade in services, investment promotion and cooperation, government procurement, technical barriers to trade, and trade facilitation.
EFTA has 29 FTAs with 40 partner countries, including Canada, Chile, China, Mexico, and South Korea.
Under FTAs, two trading partners significantly reduce or eliminate customs duties on the maximum possible number of goods traded between them, besides easing norms to promote trade in services and investments.
EFTA countries are not part of the European Union (EU) but an inter-governmental organization for the promotion and intensification of free trade. It was founded as an alternative for states that did not join the European community.
India’s exports to EFTA countries during 2022-23 stood at USD 1.92 billion (USD 1.74 billion in FY22). Imports aggregated at USD 16.74 billion during the last fiscal compared to USD 25.5 billion in 2021-22.
The trade gap, currently in EFTA’s favor, is expected to diminish significantly after the deal.
Meanwhile, a team of UK negotiators, that was in New Delhi to iron out the remaining issues holding up a bilateral FTA, returned to London on Friday, meaning the deal is now likely to be signed only after the Lok Sabha elections.
The latest 14th round of bilateral trade talks remains “open and progress continues” but the team did not get what was needed to close all the outstanding issues, the media reported.
London is “proud” of all that has been achieved so far and that the Prime Minister Rishi Sunak-led government remains committed to securing a “comprehensive and ambitious” FTA and bilateral investment treaty (BIT), an official said.
Commerce and Industry Minister Piyush Goyal said in New Delhi that long-term benefits for the economy were key in such FTA negotiations and that India was seeking a “balanced, fair and equitable” deal.
Earlier, UK Secretary of State for Business and Trade Kemi Badenoch said that while a trade deal with India could be concluded before the Lok Sabha polls, Britain does not want to use that as a deadline.
“We can sign an agreement before the Indian election. I suspect that that is not necessarily going to be the case because I don’t want to use any election as a deadline,” Badenoch said during a Global Trade conference at Chatham House in London on Thursday.
“That may be done but I am very resistant to deadlines being set on trade negotiations because it runs down the clock. It is very possible that we can sign but I am not using it as a deadline for the work that I am carrying out basically,” she said, citing India’s protectionist economy vis-a-vis the UK’s ‘liberalized’ regime as one of the factors behind the long-drawn discussions.
“The bigger the country, the more complex the trade agreement. And also, the more different the economy is, the harder it is to negotiate… India is still very protectionist, where we are very, very liberalized,” the minister stated.
India and the UK have been negotiating an FTA since January 2022 to significantly enhance the GBP 36-billion bilateral trading partnership. The 13th round of talks concluded on December 15, 2023, with both sides hopeful that the 14th round will end in an agreement.
The UK wants India to significantly reduce tariffs on its exports such as food, cars, and whisky which are currently as high as 150 percent.
