Interim India-UK trade deal will eye win-win sectors, says Kevin McCole

Reduction in tariffs on auto components can result in more manufacturing investment in India, and if the UK were to reduce tariffs on Indian textiles, it could be a win-win, says Kevin McCole

With India and the UK gearing up for the third round of negotiations for an interim trade deal, Kevin McCole, Managing Director of UK India Business Council (UKIBC) hopes to see convergence on areas where there is agreement. In an interview with Shreya Nandi, he says reduction in tariffs on auto components can result in more manufacturing investment in India, and if the UK were to reduce tariffs on Indian textiles, it could be a win-win.

Edited excerpts:

What has been the progress as of now and what can we expect from the next round of negotiations?

The negotiations have started with a great deal of pace and positivity. Following the launch on January 13, the first round of negotiations ran from January 17-28, the second from March 7-18, “inter-sessional” discussions continued, and the next full round will be in April. No dust is being allowed to settle.

In the first round of talks in January, it was more or less getting to know each other and setting out high-level objectives. It was in the second round of talks where the negotiators started to get into the details. Particular sectors on the forefront are textiles, pharma and healthcare, manufacturing, food and drinks — including alcoholic drinks.

Of course, ICT and digital services, innovative, tech-rich future-focused industries will increasingly drive expansion of UK-India trade. I’m hoping that the third round will start to see more convergence into areas where there is agreement.

What are the ‘sensitive sectors’ that can be excluded from the interim trade deal?

At this stage, I wouldn’t want to rule anything in, or out. What really matters in maximising trade, investments, and job creation.

What are the sectors that could benefit from the interim trade deal?

If there is to be an interim deal, in my view, it will be focussed on areas delivering the more obvious win-win for both countries.

For example, sectors that boost both UK exports to India, and boost investments in India. This could be in the automotive sector. If there was a reduction in tariffs on auto parts, more manufacturing investments will be made in India, more high-quality jobs will be created in India, the cost of cars will reduce, and India’s auto exports will grow as they would be more competitively priced.

Similarly, if the UK were to reduce tariffs on Indian textiles, it could be a win-win. It would grow Indian exports to the UK, create more jobs in India, and give UK importers greater choice of high-quality textiles at a lower cost.

What continues to remain the key asks from businesses in the UK?

Given the depth and breadth of the UK-India trade and investment relationship, there are a wide range of objectives. First, UK businesses would like to see a reduction in tariffs, including on alcoholic spirits, food, automotive, and in the healthcare sector. Reducing non-tariff barriers to goods trade is also important.

The third area is IP protection and alignment of data protection rules so as to drive growth in the innovative, tech-rich, and digitally-driven future-focused industries in which the UK and India excel and which will increasingly drive expansion of UK-India and, indeed, global trade.

Finally, businesses would like to see an investment chapter that provides the additional comfort that would encourage even more UK companies to invest even more in India.

Amendments to retrospective tax legislation last year has given a positive signal to investors. However, questions around arbitration remain.

For example, the model bilateral investment treaty stipulates that all domestic Indian legal channels have to be exhausted before companies go to international arbitration. This could cause legal issues for a number of years. Companies would want faster arbitration.