UK House of Lords Committee Raises Concerns Over India-UK Free Trade Agreement
A select committee of the UK House of Lords has issued a critical report on the recently negotiated Free Trade Agreement (FTA) between the United Kingdom and India. While acknowledging the deal as a significant achievement with a historically protectionist partner, the committee highlighted several shortcomings that could delay benefits for UK exporters.
Goods-Focused Deal with Limited Services Liberalisation
The International Agreements Committee report states that the FTA is heavily focused on goods trade and does not significantly liberalise trade in services. This omission is seen as a major drawback, given the UK's strengths in sectors like financial and legal services.
The UK government failed to secure a bilateral investment treaty, new market access for financial services, arrangements for legal services, or mutual recognition of professional qualifications as part of the agreement. Additionally, India did not achieve its desired outcomes on mobility issues for its professionals.
Immediate Benefits for Indian Exporters vs Delayed Gains for UK
The committee noted a disparity in the timing of benefits. Many advantages for Indian exporters materialise immediately, whereas benefits for UK exporters may take years to realise due to phased implementation and quotas. The Scottish Whisky Association indicated that full benefits might not be seen for at least a decade.
Non-Tariff Barriers and Data Flow Concerns
Non-tariff barriers in India were described as the elephant in the room during the inquiry. The report points out that provisions for financial services merely lock in existing market access without expanding it. Firms remain worried about the lack of commitments to free cross-border data flows, which is crucial for digital trade.
William Bain, Head of Trade Policy at the British Chambers of Commerce, observed that the initial negotiation phase under the Conservative government actively pursued new markets for services exports, but this focus was later dropped.
Specific Criticisms and Recommendations
The report calls for an impact assessment on the exemption of Indian workers and their employers from paying UK National Insurance for three years. It also questions whether UK workers who contributed to India's Employees Provident Fund will be eligible for refunds.
Public procurement provisions were criticised for being limited to central government entities. The committee expressed concern that several covered entities do not use India's e-procurement dashboard, making it challenging for UK companies to access tenders.
The House of Lords is expected to debate this report in March, potentially influencing future trade negotiations and policy adjustments.
