India’s recent trade deals with UAE, Switzerland, and now UK marks policy shift: GTRI

NEW DELHI: India’s recent trade deals with UAE, Switzerland, and now with United Kingdom marks a significant shift in its approach to free trade agreements (FTAs) as India is gradually opening up sensitive areas that were earlier off limits, according to a report by Global Trade Research Initiative (GTRI).

The report highlighted that these areas are government procurement, intellectual property rights, automobile, data and services. The UK agreement is particularly notable because it pushes past long-standing red lines that India had maintained on domestic regulation and policy space.

As India continues to negotiate with countries like the US and EU, these changes could set important precedents. GTRI said, “India’s recent trade deals — with the UAE, Switzerland, and now the UK — are following a pattern. Each agreement goes deeper into sensitive areas, opening up new sectors and giving up control over important policy spaces”.

One of the most significant features of the India-UK FTA is the introduction of a Tariff Rate Quota (TRQ) system for UK-made passenger cars. This is India’s first-ever automobile tariff concession in any trade agreement.

Under this, India has agreed to reduce Customs duty on large engine petrol cars (above 3,000 cc) and diesel cars (above 2,500 cc), typically high-end luxury vehicles, from over 100 per cent to just 10 per cent over a period of 15 years. The quota for such imports will start at 10,000 units and rise to 19,000 units by the fifth year.

While these reduced duties apply only to vehicles within the TRQ quota, those outside the quota will continue to face high tariffs ranging from 95 percent to 50 percent depending on the vehicle type and year. This creates a preferential path for UK brands like Jaguar and Land Rover, owned by Tata Motors, and could invite similar demands from other trade partners like Japan, the EU, South Korea, and the US.

The India UK agreement also brings major changes in the government procurement space. For the first time, India has agreed to open around 40,000 high-value contracts from central ministries and departments to UK bidders. These contracts span sectors like transport, green energy, and infrastructure. This marks a sharp departure from India’s traditionally protectionist approach in public procurement and signals greater openness in the future.

In the Intellectual Property chapter, India has made a major concession by accepting language that could restrict its ability to issue compulsory licenses, a key tool used during public health emergencies to make life-saving medicines and technologies more affordable.

India has agreed to include wording that stresses the need for “adequate remuneration” to patent holders, aligning with Article 31(h) of the TRIPS Agreement. Although this principle already exists in global IP norms, its explicit inclusion in a bilateral agreement makes it a binding obligation and could limit India’s policy flexibility under domestic law.

India has also opened up important segments of its services economy to British firms. These include accounting, auditing, financial services (with FDI in insurance capped at 74 per cent), telecom (allowing 100 per cent FDI), environmental services, and auxiliary air transport.

UK companies can now offer services like telecom and construction in India without establishing a local presence, and they will receive national treatment, meaning they will be treated the same as Indian companies. India has also agreed to recognize UK professional qualifications in fields such as law and accounting, although the legal services market remains closed.

Overall, the GTRI noted that India-UK trade agreement is more than just a commercial deal, it reflects a shift in India’s trade policy, where it is beginning to allow greater foreign access in key sectors. While these moves open up new economic opportunities, they also bring challenges and set precedents that could shape India’s future trade relationships with other global partners. (ANI)