Lowering Non-Tariff Barriers in UK-India Bilateral Trade
The UK and Indian governments are working hard to boost bilateral trade between the two economies.
With the possibility of an India-UK Free Trade Agreement (FTA) sometime in the distant future, the two sides have been undertaking a Joint Trade Review (JTR) in key sectors to remove non-tariff barriers and lay common operating standards.
This JTR is designed to secure quicker trade wins, at the same time laying the foundations for a deeper and broader trade deal after the UK leaves the EU. Trade data also suggests significant progress that has been made in this direction – between 2016 and 2017 itself, trade in goods and services between the two countries increased by 15%, reaching £18 billion in 2017.
To inform the JTR, there were a round of business consultations over the summer in London and Delhi, with prominent UK and Indian businesses participating in this exercise.
The consultations in Delhi were jointly organised by the UK India Business Council (UKIBC) and the Confederation of Indian Industry (CII), in collaboration with the Department for International Trade (DIT), and India’s Ministry of Commerce and Industry (MoCI). There were separate meetings for the three JTR focus sectors: Information and Communication Technologies (ICT); Life Sciences and Pharmaceuticals; and Food and Drink (F&D).
So, what were the key issues raised?
Indian businesses operating in the UK cited visa regulations as the issue that impacts workforce hiring and mobility across the three sectors mentioned. For UK businesses in India, the lengthy process of securing necessary permits to do business emerged as the main non-tariff issue.
The ICT discussion highlighted several issues. Indian businesses mentioned that public procurement in the UK has an unlimited liability clause, which restricts investment. For UK companies, the absence of a GDPR equivalent law in India for data protection, privacy and usage, was seen as a problem. Other issues cited by UK companies were:
• No acknowledgement of the UK certification which is granted for telecom equipment testing;
• The impact on revenue of multiple taxes such as spectrum fee, license fee and GST.
The UK companies called for codification and simplification of ICT policies in India for better governance of the sector.
In Life Sciences and Pharmaceutical, Indian businesses which operate in the UK reported that the registration process of new companies, multiple inspections of drug manufacturing facilities, and the prohibitive cost of securing patents – especially for small businesses – were the main impediments.
UK businesses operating in India cited costs, the process of securing permits for manufacturing drugs, and long delays in the case of public procurement as principal barriers. They requested an expansion of the Over-The-Counter drugs basket, and a more flexible and predictable drug pricing regime, as necessary steps to increase trade.
In the F&D sector, Indian businesses reported import restrictions on food items that contain dairy content as a barrier. UK businesses in India reported problems arising out of state-specific regulations related to alcohol, which include pricing restrictions and foreign entity related discriminatory taxation, as a barrier for doing business in that geography. Strict labelling requirements on food as well as alcohol was also cited as an impediment to future investments and trade.
These roundtables, yet again, underlined the continued strength of the bilateral trading relationship between the UK and India, and demonstrated the commitment of the two governments in resolving the issues that businesses from the other country face. These efforts will go a long way in ironing out the details of a future FTA between the two nations.