Free Trade Agreement (FTA): Constraints and Opportunities
Nature-based value-added products like textiles, footwear, marine products, and carpets will have easy access to the UK market, hence, the expectation related to FTA is that it will increase employment and GDP in India.
Bilateral trade is one of the oldest economic activities that the humans have engaged in since the advent of transportation systems.
The ancient and medieval history of human civilisation brims with multiple facts showcasing that trade had a decisive role in the formation of present-day society.
In the modern contemporary world, with the advancement in transportation systems, techniques, and technologies, bilateral trade is getting redefined with the involvement of the corresponding governments of the respective countries.
In the current world, bilateral trades are no longer mere exchanges of goods and services between two countries; rather, they demonstrate the quality of the symbiotic relationship between them.
In some instances, trade can be used as a deterrent measure to restrict the free flow of business worthy products and services by the imposition of exorbitant taxes and certain strict rules, while in some other cases, countries can exhibit synergistic affiliation by eliminating maximum hurdles in the trade route, like signing a free trade agreement.
Recent economic development in the Indo-British trade ties, the signing of the Free Trade Agreement (FTA) by the two significant economies, is an example of the insertion of a free trade regime between the two countries.
If we look into the history of our country, behind the timeline of 78 years, we had a free trade regime with the British economy, with the difference being that in previous occasion UK was the colonial ruler and India was a colony while now both the parties are sovereign entities, free to take call for the benefits of their citizens.
Economic analysts believe that this FTA will pave the way for tax exemption on most of the tradable bilateral products and services, promote the free flow of goods and services between the two countries, and create an atmosphere of fair trade.
Experts are of the opinion that the economic benefits accruing to Britain are going to be voluminous, as India has the largest demographic dividend with an extremely growing economic module.
According to the Department of Business and Trade, Government of the UK, this ambitious FTA will enhance the UK’s GDP by 4.8 billion pounds, and wages by 2.2 billion pounds annually in the long run. Along with these benefits, this ardent FTA is believed to increase the bilateral trade to the amount of 25.5 billion pounds per year in the long run.
From India’s perspective, this new trade regime will actively facilitate India’s various trade-worthy goods and services to reach Britain’s soil by exemption of import duty and reduction of stringent standards and certifications for the goods.
Nature-based value-added products like textiles, footwear, marine products, and carpets will have easy access to the UK market, hence, the expectation related to FTA is that it will increase employment and GDP in India.
Expectations are high about the kind of boost the small-scale and labour-intensive industries, like the jewellery and apparel industries, will receive from this high-profile FTA.
Individual professionals and freelancers will benefit substantially from increased outreach to the UK service market with smoother visa permits and promotion of a non-discriminatory work culture.
The future will bear testimony to the stipulations made by this hyped FTA, whether the promises will be actualised in due course, especially related to the enhancement of opportunities for small entrepreneurs and marginal farmers of India. Getting access to the UK market is one aspect of the business where they will face stiff competition from their British counterparts.
The struggle for profit will not be confined to the UK market; rather, the small business owners, self-employed businessmen, and marginal farmers of India will face the skirmish in the home market because a significant portion of the bilateral traded goods will be made duty-free.
The discomfort for the Indian traders lies in various strata, like digital literacy, hassle-free lab testing facility, certification procedure, logistics and infrastructure bottleneck, technological drawbacks in controlling the quality of the goods, especially agricultural goods, and last but not least, the shortage of funds to meet bulk orders. Simultaneously, Indian merchants need training related to the prohibitive Sanitary and Phytosanitary measures adopted in the UK market and the ways to deal with these regulations.
To control the product standards, the British administration adheres to the Technical Barriers to Trade that need to be decoded and made comprehensible by the Indian dealers.
In counting the success story of the free trade regime between the two countries, one being positioned near the tropical region facing extreme temperatures, multiple hazards around the year and the other is positioned in the temperate zone with four comfortable seasons without extreme climatic conditions, the climate will play a compelling role in deciding the portion of profit. Unlike the previous occasion, hope this time the sovereign government of India will act in the best interest of its natives.
(Views expressed are personal)
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