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India-U.K. Free Trade Agreement (FTA) UPSC NOTE

 What is a Free Trade Agreement?

  • It is a pact between two or more nations to reduce barriers to imports and exports among them.

  • Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.

  • The concept of free trade is the opposite of trade protectionism or economic isolationism.

  • FTAs can be categorized as Preferential Trade Agreement, Comprehensive Economic Cooperation Agreement, Comprehensive Economic Partnership Agreement (CEPA).

India-U.K. Free Trade Agreement (FTA)

  • Reviewing progress on the India-U.K. Free Trade Agreement (FTA) in the works, Prime Minister Narendra Modi and his British counterpart Rishi Sunak agreed that Ministers and negotiating teams would continue “to work at pace” towards an agreement.

  • A Free Trade Agreement between India and the UK is expected to enhance economic growth and prosperity by increasing import and export flows;

  • Increasing investment flows (both outward and inward).

  • Enhancing productivity through a more efficient allocation of resources and greater openness to international competition.

  • The UK is keen to gain access to Indian markets for transport equipment, electrical equipment, medical devices, chemicals, motor vehicles and parts, wines, Scotch, spirits, and some fruits and vegetables.

  • India, on its part, wants to increase exports of textiles, food and beverages, pharmaceuticals, tobacco, leather and footwear, and agricultural items like rice – to the UK.

  • Apart from reducing tariffs, the FTA also looks at lowering non-tariff barriers, particularly technical  barriers to trade around rules of origin, investor  protection and IPR.

Importance of the FTA:

  • India’s trade would see a quantum jump when the free trade pact is signed, from £23.3 billion through an Enhanced Trade Deal to £50 billion post-FTA.

  • With India set to become the world’s third-largest economy by 2050, India would become the U.K.’s most preferred partner.

  • For India, there are many benefits from access to UK technologies, advanced research and development facilities, London’s financial institutions and wealthy consumers.

  • In a post-Brexit era, the India-UK FTA would be a crucial step for the UK to reduce its dependency on the EU and establish independent trade ties outside of the EU. 

  • India on the other hand could use this opportunity to further boost the “Make in India” programme and secure strategic deals in the sectors of defence, cyber security, R & D, and health care where the UK has predominantly been a strong player.

  • Indian start-ups would enable the new/ mid-sized companies to have access to the U.K. market. 

  • On the other hand, the U.K. will have a much wider market coverage in the Indo-Pacific region.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: India-U.K. Free Trade Agreement (FTA) UPSC NOTE
India-U.K. Free Trade Agreement (FTA) UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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