India-UK FTA: A bold pathway to closer trade ties
India's labour-intensive sectors, such as textiles, leather, gems, and jewellery, are going to be significant beneficiaries of this FTA, as the UK will eliminate its tariff rates on these products. India, on its part, will lower tariff rates for passenger automobiles and other goods that are of interest to Britain. For instance, as per India's Schedule of Tariff Commitments, the tariff rates on passenger automobile vehicles will be reduced to 11%. However, this reduction has been placed in the staging category E10, which means that the tariff rate shall be reduced in ten equal annual installments. Thus, India has negotiated a more extended transition period, which will allow Indian industry ample time to prepare for the competition it will face from British cars. Moreover, the Indian automobile industry — a key success story of India's economic liberalisation — is robust and competitive enough to ward off import competition. Thus, the fear that the Indian automobile industry will suffer, as some have opined, due to the India-UK FTA, is exaggerated.
A key area covered by the India-UK FTA is government procurement. India has opened its government procurement market to British bidders, marking a significant shift in Indian policy, which has historically restricted foreign competition in this area. However, India has also protected its national interests by ensuring that the provisions related to government procurement do not apply to procurements made for national security purposes, to preferences established under public procurement policies for micro and small enterprises (MSEs), and to the procurement of agricultural products made to support agricultural programmes. Additionally, Articles 15.4(8) and 15.4(9) reference the Make in India (MII) programme. Article 15.4(9) explicitly allows India to adjust its MII programme as per national needs, while still adhering to the overall requirement of non-discrimination.
The environment chapter is another vital part of the India-UK FTA. Naysayers had held that the inability of the two sides to see eye to eye on the so-called carbon tax issue — the UK's Carbon Border Adjustment Mechanism (CBAM), which would impose a tax on India's carbon-intensive products, such as steel, aluminium, and cement — could derail the FTA. This did not happen. There is no mention of a carbon tax in the environment chapter. While concerns regarding the UK's CBAM, which is set to come into force in 2027, and its potential to encumber India's market access are genuine, Article 21.3(5) may save the day for New Delhi. This article states that domestic environmental laws should not be imposed in a manner that constitutes arbitrary or unjustifiable discrimination or results in a disguised restriction of international trade. India can utilise this provision to ensure that the UK does not use the CBAM or any environmental law for protectionist reasons.
The chapter on labour illustrates India's ongoing shift away from its traditional stance of not linking trade to labour issues. A major concern among those who oppose this trade-labour connection is the fear that developed countries might exploit labour standards as a means of trade protectionism. To address this concern, Article 20.2(3) of the India-UK FTA clearly states that labour standards should not be utilised for protectionist purposes. Furthermore, Article 20.3 explicitly acknowledges the right of countries to develop their labour laws according to their own priorities, thereby providing India with sufficient policy space.
As part of the chapter on services and movement of natural persons, India is also expected to benefit from a more liberalised trade in services regime. This would facilitate the movement of Indian professionals to work in the UK.
A significant part of the India-UK FTA is Chapter 29, covering dispute settlement. This chapter is important because it demonstrates the continued reliance of India and the UK on the judicialisation of their international economic relations, i.e., a proclivity to use judicial mechanisms rather than diplomacy to settle their trade disputes. The dispute settlement chapter allows the two sides a choice of forum to bring a dispute. Article 29.5 explicitly states that if a dispute arises over a matter under the FTA and a substantially equivalent matter under any other international agreement that binds both countries, including WTO, the complaining country may select the forum in which to settle the dispute. Such a possibility is real since obligations that countries accept under an FTA may significantly overlap with those in WTO.
A critical element of Chapter 29 is Article 29.11(8), which provides that a panel constituted under the FTA to settle a dispute between the two countries shall consider relevant interpretations contained in the WTO panel and Appellate Body reports. This provision, also present in other FTAs such as the India-UAE and Australia-UK, demonstrates the importance that India and the UK attach to the WTO jurisprudence that the US has sought to discredit. Notably, the dispute settlement chapter does not apply to chapters on government procurement, environment, and labour. This, arguably, gives India elbow-room for policy manoeuvre.
In summary, the India-UK FTA represents a bold attempt to restructure the bilateral economic relationship between the two countries. Its significance, however, goes beyond just advancing bilateral trade. It validates that bilateralism and plurilateralism will be the mainstay of international trade law-making in the foreseeable future, as WTO stands essentially crippled. Furthermore, the FTA would reinvigorate India's trade negotiations with other countries, including the European Union.
Prabhash Ranjan is a professor and vice dean (research), Jindal Global Law School. The views expressed are personal.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
5 minutes ago
- Hindustan Times
Dharam K Singh: My family was placed under house arrest
Dharam Kumar Singh was 10 when the Quit India Movement swept across the country in 1942. His grandfather, father and uncles were deeply involved in mobilising people against the British in Shivli and Rasoolabad regions, then part of Kanpur. 'When the authorities failed to trace my father and others, our entire family was placed under house arrest,' he that time, bands of children aiding the freedom movement were popularly called the Vanar Sena. 'I was part of one such group in my village. Our role was to raise patriotic slogans, distribute pamphlets, paste posters, and carry food to revolutionaries in hiding, including my father, all while evading British spies,' he said. Eventually, the chowkidar of the village, Tendi Khurd in Shivli, alerted the police. 'I too was placed under house arrest, along with my siblings, for over three months,' he vision of independent India that Singh had cherished, however, remains unfulfilled, he claimed. 'Crime has risen sharply, and corruption has reached alarming levels. Although we have made remarkable economic progress, crime and corruption have also grown alongside it.' Dharam K Singh: My family was placed under house arrest
Hindustan Times
5 minutes ago
- Hindustan Times
Iqbal Singh went to jail when children his age learnt the alphabet
At an age when most children are busy learning the alphabet and numbers, Iqbal Singh was learning the harsh realities of colonial oppression — inside a prison cell. Iqbal Singh went to jail when children his age learnt the alphabet Now 89, the freedom fighter from Ferozepur district, who has lived in Ludhiana for 45 years, recalled how he was just 7 or 8 when he joined a protest against British rule. 'They arrested me along with other protestors and sent us to Lahore Central Jail. My age didn't matter to them; the British officers thrashed me mercilessly,' he said. After coming to Ludhiana, he started dairy farming. His son Gursewak Singh is continuing the business. He takes pride in India's development but he has one regret. 'The state government used to invite us to attend Independence Day and Republic Day celebrations every year,' he said. 'Now, very few of us freedom fighters are alive. Yet many of our demands, like proper housing and free medical facilities, remain unmet.'
Hindustan Times
5 minutes ago
- Hindustan Times
HT Archive: Building an equitable for our tribals
When Independence came, the leaders should have given it some consideration that the British were here to exploit India, and not to make it a flourishing economy. The leaders should have started everything from scratch, like strict enforcement of land reforms, land distribution to the landless, preservation and enlargement of forest areas, setting up of schools, laying roadways, ensuring drinking water and Irrigation facilities. electricity, housing, etc. These should have reached the people living below the poverty line all over India, and this should have been achieved by 50 years. But, regrettably, only 10% may have been achieved. Jawaharlal Nehru addresses the nation from Red Fort on Independence Day (HT Photo) We can well surmise that the tribals have borne the brunt of this laid-back attitude. In making big projects, the Government of India is always taking away tribal land. The evicted tribals are increasing in number, becoming rootless and swelling the number of migrant workers. They have been chiefly left at the mercy of contractors entrusted with the construction of such big projects such as the Narmada dam or the Heavy Engineering Corporation (HEC) at Ranchi. The DVC dams in West Bengal and Bihar saw thousands and thousands of Santhals evicted. We find that to meet the ever-growing need for land of non-resident Indians or residential non-Indians, agricultural land is being taken away. As a result, both tribal and non-tribal peasants have suffered. In the Sunderbans, hundreds of acres of tribal land have been converted into fisheries for prawn cultivation. In the eighteenth and nineteenth centuries, after the tribal revolt in the Chhotanagpur plateau, countless Santhals, Oraons, Mundas, Bedias and other tribals became landless. They were recruited by middlemen for cleaning the jungle and preparing large tracts for tea gardens as well as cropland. That is how these tribals came to West Bengal. On making an objective survey of Andhra Pradesh, Madhya Pradesh, Bihar and other places, we find that the story remains the same. Even before Independence, tribal and non-tribal peasants in Kakdwip in West Bengal and Telangana in Andhra Pradesh were deprived of land. By 1955, the Zamindari Abolition Act came into force. But the zamindars had pre-empted this move by 1952-53. So, they felled forests, kept benami land and evicted tribals who had lived there for hundreds of years. In most cases, they held the ownership rayati patta. In the tea gardens in the 19th century, tribals were given large areas of land, but no patta. As the returns from the gardens increased, the tribals were evicted. The 1946 Tebhaga movement in Jalpaiguri was a result of the grievances of the landless tribals, and 12 of them became martyrs while fighting for their cause. The Naxalite movement originated from the land-grievance of the tribals. There are legal provisions to preserve tribal land. But neither the tribals nor the government can do anything as land revenue officers are generally corrupt. For a tribal to approach them and get redress is almost impossible. To make matters worse, no land reform has been attempted in the rest of the country. Even in a state like Kerala, the assembly passed a bill the other day which said outsiders could acquire any tribal land anywhere. The worst sufferers among them are the so-called criminal tribals. In 1871, the British notified many forest tribes as criminal ones along with some Scheduled Caste groups. In 1952, the Government of India declared them as denotified tribes, meaning they would no longer be treated as criminals. But for years the neighbouring people and the police have grown into believing that such tribes comprised born criminals. We have Lodhas in Midnapore district and the Kheria-Shabars in Purulia in this category. On December 20, 1996, five Lodhas rescued a forest beat officer from some miscreants who had attacked him when the officer caught them red-handed felling trees. The Lodhas not only saved him, but also took him to hospital, risking their own lives. Four days later the forest officer lodged an FIR with the local police naming the culprits and speaking eloquently of the Lodhas. But the district police submitted a charge sheet in which the five Lodhas were named as the accused. The Lodhas have fled their homes in terror. That there exists a bias against these people cannot be denied. Another example highlighting the same situation involves Lalit Shabar, a Kheria boy, who was sent to work in a neighbouring village. There he was bound to a tree and his right hand chopped off by none other than the local panchayat pradhan. The Lodhas and Kherias bear the stigma of being branded criminals to this day as the people and the police refuse to change their attitude. But there has emerged a silver lining. Women's organisations are coming up. Women have become conscious of the discrimination against them and are protesting. In Nellore district in Andhra Pradesh, women rose in protest against country liquor and forced the government to ban it, though the move has not been totally successful. The point to remember is that the protesting women belonged to the poorer strata of society. Women are also increasingly joining the decision-making process at the grassroot level. Edited except of an article written by author and activist Mahasweta Devi that appeared on August 15, 1997.
