In July, the UK and Indian governments agreed in the Joint Economic and Trade Committee (JETCO) to remove barriers to trade under a Roadmap to a Free Trade Agreement (FTA). The two have agreed that the governments will forge an enhanced trading partnership. This is the first step in a roadmap for a UK-India Free Trade Agreement. In an interview with Business lineJayant Krishna, the first CEO of the UK-India Business Council, spoke about the mutual areas of cooperation and the free trade agreement between the two countries. Extracts:
Which areas of mutual cooperation do the countries consider, especially against the background of Covid-19?
India invested in 120 projects and created 5,429 new jobs in the UK to become the second largest source of FDI after the US in 2019.
The Department of International Trade (DIT) foreign investment statistics for 2019-20 data found India saw UK foreign direct investment grow 4 percent in 2018-19 and 1,852 new foreign investment projects were undertaken in fiscal 2019-20.
Given that global companies are trying to decouple their supply chains, the UK expects a significant increase in trade in sectors such as healthcare and life sciences, packaged food and beverages, education and information technology.
From an Indian perspective, it has moved to cut tariffs on packaged foods such as daal and dairy products, while the UK is aiming to lower import tariffs on Scottish spirits.
In areas such as healthcare, UKIBC also welcomes the continued focus of both governments on removing trade barriers. India already provides around 25 percent of the NHS-related goods and services. Indian hospitals can look into working together, and intervention costs can further reduce health costs. The Covid-19 pandemic taught us that the best way to solve a global problem is through collaborative solutions, which are possible when businesses and governments come together.
In July, the UK India Business Council signed a Memorandum of Understanding (MoU) with the Maharashtra Industrial Development Corporation (MIDC) for infrastructure development in the state. In Gujarat, we signed an agreement with the Industrial Extension Bureau (iNDEXTb), Industry and Mining Department, Government of Gujarat, to promote business and industrial development in the state. It also aims to proactively improve the business environment and strengthen cooperation with British companies in Gujarat.
Countries like India, USA, Japan, Australia and France have taken an anti-Chinese stance and offer incentives for companies to compromise their supply chains. What are your views
Supply chain relocation takes a long time. Companies (in the UK) are exploring their options. You need to remember that this will happen over time as not everyone can shut down their supply chains or decrease their reliance on China overnight. Businesses need more incentives and governments need to go that extra mile. In India, the Performance-Linked Incentive (PLI) for the manufacturing sector is a laudable effort that has resulted in a good size in terms of the domestic mobile phone industry. India can take advantage of the fact that Chinese labor became expensive before Covid-19.
The Indian IT sector faced visa restrictions in the US. Do you want to attract IT related investments to the UK?
The UK is changing its immigration program, especially after leaving the EU in 2020. A new immigration law will end the free movement of people out of the EU and introduce a points-based system for all foreign workers aimed at attracting only highly skilled workers. If you look at the data, around 57,000 Tier 2 (skilled work) visas were issued to Indians in 2019, which is more than half of all 114,000 Tier 2 visas issued by the UK. This continues a positive trend: around 55,000 Indians received a Tier 2 visa for skilled work in 2018. In addition, Indian nationals saw the number of Tier 4 (student) visas issued in 2019 increased by 93 percent from the previous year’s 37,540 in 2018, an increase since 2016. Education, particularly higher education, is home to 20 of the top 100 institutions in Great Britain. With the National Education Policy (NEP), institutions like Imperial College and Cambridge are monitoring the 37-crore market for students in India. At the same time, we are working on the mutual recognition of qualifications in both countries.