Britain’s freedom from EU red tape will allow it to increase exports to India by more than £2billion per year, a new analysis has found.
The report, titled Brexit: Opportunities for India, says that the UK and India can secure a far-reaching deal which will see the value of British exports to India rise from £4.2bn to £6.3bn, an increase of £2.1bn, or 33 per cent.
Imports from India to the UK will rise by around £1 billion, meaning the UK’s balance of trade will be improved.
The UK currently faces significant tariffs on its trade with India because of the European Union’s failure to agree a free trade deal.
The deal has been held up for a decade by European Union regulations on intellectual property and data protection, with which India is refusing to comply.
But after Britain leaves the EU, the deal can go ahead because British trade negotiators regard the disputed EU rules as unnecessary.
A report by the Commonwealth, whose 52 member nations include India and the UK, says that Brexit will present a significant “opportunity”.
The report says: “Given the slow pace of negotiations over [a trade deal] with the EU, Brexit provides a fresh opportunity to India to strengthen its economic relationship with the UK through an India–UK trade and investment agreement.”
It suggests that the UK will be able to show more “flexibility” than the EU on red tape and increase trade between the two nations as a result.
At present that are significant tariffs on trade between India and the UK. British businesses exporting to India face tariffs worth 14.8 per cent, while Indian exports into the UK face tariffs worth 8.4 per cent on average.
The report’s author, Rashmi Banga, suggests the UK will be able to get its free trade agreement (FTA) with India up and running before the EU does, giving Britain a further edge.
Manish Goel a Delhi based entrepreneur who runs the tour operator Nivalink said the Indian tourism industry is excited by the new era of British Indian relations.
“As the months have played out since the announcement of Brexit, we foresee an increase in tourism from India to UK, with the depreciation of the pound by approx. 12-15%. As part of the Commonwealth, the two nations share a deep-rooted history and ties, which will only strengthen as the proposed India-UK FTA comes into force. The UK will continue to remain a natural and primary choice for Indians traveling for studies considering a world-class education system, or even for other tourism purposes where the UK’s large Indian diaspora creates a sense of home.”
Pratik Dattani UK director of Indian business group FICCI told IndiaGBNews.com Britain needed to improve its exports to India which have recently dropped.
“There is great potential for future growth in trade between India and the UK,” he said. “This is especially as the most recent UK government figures show India has dropped out of the top 20 export markets for the UK. The potential for trade creation if tariffs between both countries are reduced, comes in sectors where India has traditionally shown strong export performance like gems and jewellery, clothing, leather goods and handbags, and machinery and mechanical appliances sectors.
“We welcome any contribution to building a better understanding of the potential of the economic ties between India and the UK. As the UK government intensifies its efforts to build further relationships with non-EU markets post-Brexit, India remains the world’s fastest growing major economy. The coming months will no doubt see a need for continued robust analysis of the impact on trade in different sectors.”
Sanjay Srivastava COO, of Mahindra World Cities Jaipur, speaking exclusively to IndiaGBnews said
“Post Brexit, there is an expectation of increased direct trade take-off between India and the UK. We believe there might be improved opportunities for UK-based firms to establish their manufacturing and services operations in India to tap both domestic demand and exports. This also fits in well with strategic, pro-growth initiatives like Make In India. Our Mahindra World City (MWC) developments, executed in public-private partnership with the Tamil Nadu Industrial Development Corporation Limited (“TIDCO”) and the Rajasthan State Industrial Development and Investment Corporation Limited (“RIICO”), cater to over 130 customers across sectors such as IT/ITES, apparel, auto ancillaries, light engineering and handicrafts. These include UK clients such as JCB, Rexam/Ball Corporation, which are currently located in MWC Jaipur. The Mahindra World Cities are planned as self-contained townships and include a combination of industrial and commercial real estate developments, providing an integrated environment for ‘Livelihood, Living and Life’. At Mahindra World City, we are focused on current and future market opportunities and offer plug-n-play infrastructure and a thriving ecosystem as enablers of business growth.”
The Department for International Trade is currently auditing potential barriers to free trade deals including EU regulations.
The report further suggests that there is significant potential for the growth in the export of pearls and precious stones from the UK to India, cars and car parts and alcohol. It says that the that some of the biggest increases in trade are for whisky and gin.
Both Philip Hammond, the Chancellor, and Greg Clark, the Business Secretary, have visited India in the past month in an attempt to lay the groundwork for a future free trade deal.