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There’s political will to make India-UK FTA a reality: Kevin McCole, MD at UK India Business Council

Kevin McCole says textiles, pharmaceuticals, healthcare, alcoholic drinks like Scotch, ICT and digital services will likely feature prominently in the talks.

Kevin McCole, managing director at the UK India Business Council (UKIBC).

As India and the UK get down to a second round of negotiations in London on Monday for a free trade agreement (FTA), Kevin McCole, managing director at the UK India Business Council (UKIBC), says textiles, pharmaceuticals, healthcare, alcoholic drinks like Scotch, ICT and digital services will likely feature prominently in the talks. In an email interview to FE’s Banikinkar Pattanayak, McCole exudes confidence that these FTA talks won’t suffer from the strong differences that India and the EU have witnessed in their trade negotiations over the years. There is a strong relationship across the governments, from the Prime Ministers down, to conclude the agreement, he says.

Both India and the UK will resume FTA negotiations on March 7. Which are those goods and services segments where we can expect progress in this second round of talks?

I think this second round of talks is where the negotiators will start to get into the detail, so it is great news that they will meet face-to-face, with the Indian team in London across two weeks.

As in the first round, the negotiators will consider a wide range of issues, for instance sustainability, standards, tariffs, SMEs, procurement, data flows and intellectual property that span a very wide range of sectors, across both goods and services. Particular sectors that seem front of mind are textiles, pharmaceuticals and healthcare, food and drink — including alcoholic drinks like Scotch. Plus, of course, ICT (information and communications technology) and digital services — the innovative, tech-rich future-focused industries that will increasingly drive expansion of UK-India trade.

An interim trade deal will reportedly cover about 60-65% of imported goods and 50-60 lines of services (out of about 160 lines)? How soon can it be concluded?

I don’t want to tempt fate, so won’t make a prediction on the timing of the reported interim deal. What I will say is that negotiations have started at great pace, and with great positivity. The ministerial announcement on January 13 was quickly followed by two weeks of intense and upbeat talks. The negotiators have barely had time to catch a breath and they’re starting their second round this week starting March 7.

As well as pace and positivity, the negotiations are also benefitting from great political will, with Indian commerce and industry minister Piyush Goyal and the UK’s secretary of state Anne-Marie Trevelyan demonstrating their commitment to making a deal happen in a much faster timescale than many anticipated. We at the UKIBC believe that an interim deal would be a positive, bringing economic benefits quickly. Importantly, though, an interim deal is only a good thing if it is a staging post to the comprehensive agreement that will be needed to realise the potential of the bilateral relationship to maximise trade and investment flows, to create many thousands more jobs, and increase prosperity across both countries.

The India-EU FTA talks haven’t yet progressed much, as both the sides have had stark differences in areas, including liquor, automobiles and intellectual property rights (IPRs). The UK was a part of the EU for a long time. Why do you think the India-UK FTA negotiations won’t suffer from such differences?

There are three reasons I am optimistic about the India-UK negotiations. First, there is a real political will on both the sides and strong relationship across the governments, from the Prime Ministers down. These personal relationships should not be undervalued.

Second, the UK government has laid-out the “Indo-Pacific tilt” in its foreign policy, and has made it very clear that India is a key partner.

And third, ministers, officials and businesses can see that that an India-UK FTA can be a win-win, bringing tremendous benefits to both countries. So, I get the sense that ministers will be pragmatic and won’t let tricky areas stop them concluding a deal. They’ll focus on what can be done, not on what can’t.

What do the UK businesses want India to do and what can they offer to make the FTA a win-win deal for both the countries?

UK businesses have big ambitions for and confidence in India. They want to invest more in India, export to India, import from India, and build partnerships with Indian companies, including partnerships to share and co-create new technology and IP. The FTA, and India’s ongoing improvements to the ease of doing business, can facilitate this broad range of objectives and help realise the huge potential of the UK-India relationship.

There are a few areas where an FTA can help deliver this ambition. If tariffs were reduced on UK goods, including, for example, auto components, then more manufacturing investment would flow to India. If there was standards and regulatory alignment and simplification, then more UK food and drink companies would invest in India. An alignment of UK-India IP regimes would give greater confidence to innovators and tech-rich companies, encouraging them to establish their presence in India. And, to drive growth in the digital and data services that will be increasingly important for global trade, businesses would like to see a UK-India data adequacy agreement.

At the same time, access to the UK market will be a big prize for Indian companies. It is the world’s fifth-biggest economy with a high GDP per capita. It’s an economy driven by services and consumers. In short, it is a huge market opportunity for Indian exporters across a wide range of sectors, not least pharma and healthcare, textiles and clothing, food and drink, and, of course, ICT.

Indian manufacturers looking for advanced technologies can also benefit from the UK. In particular, the UK is a world-leader in manufacturing R&D, including in technologies to accelerate the decarbonisation of industry. It is striking that in recent times TVS Motors, Mahindra, Reliance and Ola have all made investment in EV R&D in the UK.

What are the “IP-rich, digitally-driven services” that you want the interim deal to cover?

The deal, whether interim or more-comprehensive can spur two-way trade and investment in technology. In a digital world, where goods supply chains are increasingly regional rather than global, it is clear that IP-rich innovations, technology transfer, and digital services are going to drive the future trading partnership between the UK and India.

So, it is important that businesses will be able to protect and fully commercialise their IP. That is true across all sectors but the sectors where IP is particularly important are digital and data services, healthcare and life sciences, energy, and defence and aerospace.

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