As India and the United Kingdom successfully conclude their Free Trade Agreement (FTA), it has to be ensured that goods traded between the two nations have sufficient local content to prevent Chinese goods from entering markets through the backdoor, according to a report by Canara Bank.
The report highlighted the need for strict measures to confirm the origin of goods. It said, “it has to be ensured that goods traded between UK and India has sufficient local content to foolproof from Chinese goods finding their way to take advantage of lower duties.”
The report called the FTA a major win for India. It pointed out that the country has secured duty-free access to the UK market on 99% of its tariff lines, which will significantly benefit Indian exporters. However, it warned that without strict rules of origin and content verification, the agreement could be misused.
In terms of sensitive sectors, the report noted that agriculture and dairy products have been excluded from the agreement.
What Else For FTA?
These sectors have remained contentious in India’s negotiations with other major partners like the European Union and Australia. “Agriculture and dairy products have been excluded from the FTA, which is a bone of contention in our negotiations on similar FTAs with EU and Australia. Any give away on these sectors in subsequent FTAs could negate advantages gained from the FTA with UK,” the report cautioned.
On the financial services front, the report said that both India and the UK will be required to provide equal treatment to each other’s banking and insurance sectors. This could allow British financial firms to expand their presence in India more easily. Likewise, Indian companies in the financial services sector could find better opportunities in the UK.
The report concluded that this reciprocal treatment in the financial sector addresses a long-standing concern in India-UK economic relations and could pave the way for deeper collaboration between the two countries.
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