Free trade talks with EU to be ‘modified’

India will study Britain-related tariff lines, a part of India-EU FTA talks

June 24, 2016 11:02 pm | Updated October 18, 2016 03:10 pm IST - NEW DELHI:

Britain’s exit from the European Union will not have any immediate impact on India’s trade and investment with the U.K. and the EU, but the proposed India-EU Free Trade Agreement (FTA) will see some “modifications and moderations,” Commerce Secretary Rita Teaotia said.

The Centre does not see any immediate impact of Brexit on ties with the U.K. and the EU as trade and investment with the two are currently happening not on the basis of an FTA but on a bilateral basis, Teaotia told reporters on the sidelines of a CII event here.

Ms Teaotia said the implications of Brexit will happen only after 2018 when the terms and conditions regarding Britain’s exit from the EU are likely to be finalised.

India was not waiting for Brexit to happen to resume FTA talks with the EU, Teaotia said. “We have been writing to the EU that we are willing to sit down for further negotiations.”

No talks from scratch

She said that India was not in favour of restarting the FTA talks from scratch, owing to the impending separation of the U.K. and the EU.

A lot of work gone has into making progress in the FTA negotiations, she said. There could, however, be “some modifications and moderations” because negotiations on the FTA had begun way back in 2007. “Certainly the world is somewhat different in 2016 and so the parameters of the (FTA) discussions will be different,” she said, adding that Britain’s exit from the EU will certainly affect India’s interests on those tariff lines where concessions were being considered on account of Britain. India will undertake a study of those Britain-related tariff lines that are part of India-EU FTA talks, Teaotia said.

Separate FTA ruled out

Though official sources had indicated that there could be a possibility of India considering a separate FTA with the U.K., Teaotia denied it saying "(there is) nothing of that sort as of now.”

The India-EU FTA negotiations have been deadlocked since 2013 after 16 rounds of talks due to several differences. Both sides are yet to fix dates to resume negotiations.

Commerce Minister Nirmala Sitharaman said that there will be some impact on trade in the short-term due to the currency volatility, adding that the government was closely monitoring the situation to assess the short, medium and long-term impact on India’s trade and investment with the U.K. and the EU.

S. C. Ralhan, President, Federation of India Export Organisations (FIEO), said much will depend on what kind of negotiation Britain works out with EU within the two years window available to replace the terms of EU membership.

“If Britain gets the same treatment in terms of Free Tariff and Free Movement of persons, not much will change for India. However, if Britain gets the treatment as applicable to a non-member country, it may lead to positive impact on India’s exports to EU as well as to Britain,” Ralhan said.

Service providers

Similarly, any restriction on movement of persons from EU to Britain will open opportunity for Indian service providers in wide range of services, he said.

Ralhan said in the immediate future, currency volatility may put pressure on India’s exports as both British Pound and Euro will depreciate giving greater competitiveness to their products particularly in third countries. With currency depreciation, the domestic manufacturer in EU and Britain may get some competitiveness as imports becoming costlier having its effect on India’s and other countries exports, he said. This may also increase imports from Britain and EU, if their currency remain weaker on a medium-term basis.

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