ROAD TO A UK-INDIA FREE TRADE AGREEMENT

  • The UK India Business Council (UKIBC) has released a report titled ‘Road to a UK-India Free Trade Agreement: Enhancing the Partnership and Achieving Self-reliance’.
  • According to the UKIBC annual Survey on Doing Business in India, 77% of UK companies believe that the Atmanirbhar Bharat campaign is an “opportunity” rather than a challenge.
  • However, the council emphasized that some of the reforms under the self reliant programme could have negative consequences for the UK and all multinational companies.

Important points:

  • The programme should be viewed as an extension of the “Make in India” campaign, launched in 2014, as they share the aim of securing manufacturing investments from domestic and international business.
  • The package offered a range of financial support measures for the weaker sections of India’s society, for micro, small and medium sized enterprises (MSMEs), and for the agriculture sector, creating fair market platforms, easing rules for businesses and a range of other solutions to support the economy.
  • The campaign has opened up several sectors for foreign investors, including defence, atomic energy, agriculture, insurance, healthcare and civil aviation.
  • Curtail International Trade and Investment: Certain aspects of the programme have the potential to curtail international trade and investment, such as increased tariffs, non-tariff restrictions on imports, and import substitution.
  • Non-tariff Barrier is a trade restriction, such as a quota, embargo or sanction, that countries use to further their political and economic goals.
  • Countries can use non tariff barriers in place of, or in conjunction with, standard tariff barriers (like Custom Duty).
  • DISCOMS- power distribution companies- adopt to ad-hoc changes to renegotiate power purchase agreements in case of renewable energy sector.
  • Data localisation (i.e. storing data within the boundaries of the country) may restrict the ability of local companies to compete in the global marketplace by limiting access to the global supply chain.
  • This isolation may result in reduced investment and access to capital and customers.
  • In Space Sector: To open the Space sector to private investors was a significant step but there was, however, a ‘lack of clarity’ about several aspects related to the procedures.
  • Indian National Space Promotion and Authorization Centre (IN-SPACe) provides a level playing field for private companies to use Indian space infrastructure.
  • In Defence Sector: The import embargo on the 101 items of defence equipment is planned to be implemented over a period of four years until 2024.
  • Also changes in the Defence Acquisition Procedure (DAP) 2020 are expected to ensure that no item in this list is imported beyond the cut-off date.
  • This may impact foreign investment in India.

Suggestion:

  • A long term approach that considers regional supply chains and location decision-making is needed to succeed.
  • India should attract investors due to its strengths rather than by using tariffs as a tool to push international businesses to invest and make in India.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

About ChinmayaIAS Academy - Current Affairs

Check Also

WATER SCARCITY IN INDIA

The country has 18 percent of the world’s population, but only 4 percent of its …

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Free Updates to Crack the Exam!
Subscribe to our Newsletter for free daily updates