Is India close to a free trade agreement with the UK? | Real Time Headlines

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Softbank’ backed Ola Electric will raise nearly three-quarters of a billion dollars through a stock market listing. adani energy solutions A $1 billion stock sale is moving forward. drug manufacturer Human pharmaceuticals has locked in a $1.6 billion deal to acquire Covid-19 vaccine developer Bharat Serums & Vaccines.

These deals announced in the past seven days or so represent only a fraction of the true size of Indian corporate deals. But Indian politicians appear to share the sentiment.

India and four European countries – Iceland, Liechtenstein, Norway and Switzerland – entered into a free trade agreement (FTA) earlier this year. A deal with the UK now appears imminent.

Britain’s new Foreign Secretary David Lamy visited New Delhi just weeks after taking office. “Our free trade agreement negotiations are a foundation, not a ceiling, on our ambition to unlock our shared potential and deliver growth from Bangalore to Birmingham,” Lamy said last week before the visit.

How close is it to a deal?

Both countries are sufficiently motivated and see each other benefiting from the agreement. Chietigj Bajpaee, senior fellow for South Asia at the think tank, said a free trade agreement with India would be the “most important” agreement for the UK since the Brexit referendum. chatham house.

The deal would also be a big win for India, which will see a flood of investment that could lead to thousands of jobs – a top priority of Prime Minister Narendra Modi’s third government.

“Both countries stand to gain significant economic gains from a comprehensive deal,” said Astha Gudvani, India economist at Bank of America.

The UK has trade deals with Singapore and Japan, with whom India has long had a Comprehensive Economic Partnership Agreement (CEPA). India and the UK also rank highly in the World Bank’s Trade Complementarity Index, which shows whether the two countries are natural trading partners.

Even politically, both countries now have a new mandate to make deals. Keshav Murugesh, CEO of New York Stock Exchange-listed business process outsourcing company, said: “There is a huge need for physical delivery on both sides now” wireless network systemtold CNBC’s “Inside India.”

india demands

A key need for India is to simplify temporary visas for business and professionals in the UK. Such a scheme would benefit companies in India’s prominent IT and BPO sectors, including companies like WNS, which employs over 60,000 people globally.

In the past, the British government has faced the challenge of convincing voters that allowing overseas workers to do business in the UK will help economic growth. However, the new Labor government appears to be more lenient.

Murugesh explains that companies like his – which already employ hundreds of people in the UK – need to occasionally bring in experts in specific areas to win new business. These professionals often need to visit the UK to understand the needs of potential clients and are expected to return to India to develop solutions.

“It’s not that these people coming in are potential immigrants,” Murugesh added. “These people are actually here to deliver a global project that will benefit multinational companies based in the UK or anywhere else at scale.”

India is also keen to get an exemption from the UK’s carbon border adjustment mechanism. CBAM is a tax on carbon-intensive products that penalizes products produced in countries that have not done enough to decarbonize.

“India’s argument is that a carbon tax would likely undo most of the concessions agreed in the free trade agreement,” Bank of America’s Gudwani said in a research note to clients.

However, similar tariffs on goods sold to the EU are due to come into effect in 2026, and any loophole created by the UK could cause the country to lose better trading arrangements with the EU, Britain’s largest trading partner.

UK demands

Since India (quietly) ended its relationship with more than 50 countries in 2017, this does not currently exist between the UK and India. These agreements have historically protected investors and companies investing in India.

Several disputes between the Indian government and British companies, e.g. Vodafoneand Cairn Energy suing to seize Air India planes to enforce a $1.2 billion arbitration award, mean the UK is unlikely to agree to any deal without investor protections.

“Given the ongoing dispute between the Indian government and British companies over investment protection, both parties are likely to negotiate a strong investment protection agreement to address their respective concerns,” Gudvani added.

Infosys submitted tax demand of $4 billion. India’s second largest IT services company wins Tax needs are approximately $4 billion services beyond those obtained from its overseas branches. Infosys said in a statement that it believes the tax “does not apply” to transactions identified by the government.

Modi’s Bharatiya Janata Party is debating whether India needs Chinese investment. An “internal struggle” is taking place within India’s ruling party, the Bharatiya Janata Party Invite Chinese investmentAlicia Garcia-Herrero, chief economist for Asia Pacific, told CNBC. Although India’s chief economic adviser proposed promoting foreign direct investment from China as a better option than increasing trade activities between the two countries, India’s trade minister rejected the idea and said it was “not being reconsidered at the moment”.

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Indian stocks hit record highs again. this nifty 50 The index closed above 25,000 points for the first time. The index has risen 15.09% this year, outperforming the market S&P 500 Indexup 14.87%.

The benchmark 10-year government bond yield in India has fallen to 6.91%, hitting its lowest point in April 2022.

Generic drugmaker CEO Erez Israel spoke on CNBC this week Dr. Reddy’s LaboratoryIt said that in the next ten years, about 90% of drugs facing the “patent cliff” (expiration of patent protection) will appear in the field of biologics. “We absolutely plan to get into the biosimilar business,” Israel added. Dr Reddy’s It is also a US listed company.

Meanwhile, Pieter Elbers, CEO of India’s largest airline indigospoke to CNBC’s “Street Signs Asia” about the airline’s decision Allow women to choose not to sit next to men On the flight.