UK aims to boost its presence in India’s auto sector with FTA talks

The UK is looking to increase its share in India’s booming auto industry, as the two countries are set to begin negotiations for a free trade agreement (FTA) this year. The UK’s trade commissioner to South Asia, Alex Ellis, said that the FTA would create new opportunities for British and Indian automakers to collaborate and expand their markets.

India and the UK have a strong bilateral trade relationship, with a total trade value of $15.4 billion in 2020. The UK is India’s 13th largest trading partner and the second largest in Europe. The two countries have also established several dialogues and partnerships on various sectors, including climate change, defence, health, and education.

UK aims to boost its presence in India’s auto sector with FTA talks
UK aims to boost its presence in India’s auto sector with FTA talks

However, the trade potential between India and the UK remains untapped, as they face several barriers such as tariffs, non-tariff measures, regulatory issues, and market access constraints. The FTA is expected to address these challenges and enhance the trade and investment flows between the two countries.

UK’s interest in India’s auto sector

One of the key sectors that the UK is keen to explore with India is the auto industry, which is one of the largest and fastest-growing in the world. India’s auto sector contributes about 7.5% to the country’s GDP and employs over 37 million people. India is also the fourth largest manufacturer of passenger vehicles and the seventh largest producer of commercial vehicles in the world.

The UK has a strong presence in India’s auto sector, with several British brands such as Jaguar Land Rover, MG Motor, and Triumph operating in the country. The UK is also a leading exporter of auto components and services to India, with a market share of 4.4% in 2019. The UK’s auto sector employs over 800,000 people and accounts for 14.4% of the country’s total exports.

The FTA would provide new opportunities for the UK and India to collaborate on areas such as electric vehicles, hydrogen fuel cells, autonomous driving, and smart mobility. The FTA would also reduce the tariffs and non-tariff barriers that affect the trade of auto products between the two countries.

Benefits of the FTA for both countries

The FTA would benefit both India and the UK in terms of economic growth, job creation, innovation, and environmental sustainability. According to a joint feasibility study, the FTA could increase the bilateral trade by $13.1 billion by 2030, with a positive impact on both countries’ GDP. The FTA could also create over 100,000 jobs in both countries, especially in sectors such as auto, textiles, chemicals, and services.

The FTA would also foster innovation and technology transfer between the two countries, as they share common interests and strengths in areas such as digital, green, and health technologies. The FTA would also support the climate goals of both countries, as they are committed to achieving net-zero emissions by 2050 and have joined the COP26 Climate Ambition Coalition.

The FTA negotiations are expected to begin in early 2024, after the completion of the public consultations and the scoping exercise. The FTA would be a comprehensive and ambitious agreement, covering goods, services, investment, intellectual property, digital trade, and sustainable development. The FTA would also be compatible with the multilateral trading system and the regional integration initiatives of both countries.

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