A promise of mutual benefit

After more than three years of intensive negotiations, India and the UK finally wrapped up their bilateral free trade agreement (FTA), which leaders of both countries described as "a historic milestone in the bilateral Comprehensive Strategic Partnership that would foster trade, investment, innovation, and job creation in both the economies".

- BISWAJIT DHAR

The two expect this FTA to significantly enhance bilateral trade, generate new avenues for employment, raise living standards, and improve the overall well-being of citizens in both countries.

These expectations of mutual benefit from a trade deal rings refreshingly different from the trade agreements that US President Donald Trump is trying to negotiate with several partner countries, including India.

While the Trump administration's objective is to negotiate FTAs to secure benefits solely for the American stakeholders, the India-UK FTA focuses on benefit accruing to both partners from the opening of markets.

India's FTA with the UK is significant, especially because it is the first among several FTAs that India would formalize with a number of key partners, including the US and the European Union.

If these two FTAs are finalized, as they are likely to in the ensuing months, almost one-half of India's total trade would be conducted with FTA partners.

This is a remarkable turnaround for a country which was an FTA-sceptic just over two decades ago.

Though the entire details of the India-UK FTA are not yet available, estimates available from the UK's Department for Business and Trade (DBT) shows that by 2040, the FTA would increase two-way trade between the two nations by $32 billion.

Thus, within the next decade and a half, India-UK trade should expand 2.5 times, reversing the declining importance of the UK as India's trade partner since the turn of the millennium.

In 2000-01, the UK's share in India's total trade was 5.8%, making it the second largest partner.