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UK Interests in EU-India Free Trade Agreement


With economic growth of up to eight percent, India has become an important partner with the EU countries (Mataritonna, 2006). The country is regarded to be one of the fastest-growing economies around the globe. However, India’s tariffs and non-tariff barriers are the main hindrances to international trade between the country and other international countries. In the year 2004, the country became one of the EU’s strategic partners (Bava et al. 2008). In the subsequent year, India and EU members revised their tiers, with a joint action plan aimed at improving their relationship on key areas of interest. Through this process, institutional frameworks were put in place flowing down from the joint summit meetings to their sub-commission, mandated on trade. A Free Trade Area (FTA) was set up in the year 2007 to address numerous trade barriers among EU members and India. Despite its numerous economic benefits, critics have persistently opposed the creation of the FTA between EU members and India (Mataritonna, 2006). To dispel dogmas created by the critics, the United Kingdom decided to state its interest in the ongoing FTA negotiations.

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Decrease in trade obstacles

The ongoing FTA trade agreements have led to a decline in trade obstacles. As a result, improvements in trading conditions have been enhanced, to improve industrial growth, employment, and sustainable development (Bindi, 2010). With the elimination of trade barriers, EU members and India aims at achieving the elimination of duties on ninety percent tariff lines and trade volume in the next seven years, upon implementation of the agreement. Similarly, modalities for the treatment of sensitive products would be agreed on at the end of negotiations (Bindi, 2010). Through this, the UK is greatly convinced that with the complete elimination of non-justified tariffs and other obstacles, substantial benefits of bilateral trade will be implemented in the long term.

Meanwhile, the ongoing FTA negotiations between EU members and India will result in huge economic effects. Our country, the United Kingdom, as a member of the EU, will greatly benefit from the bilateral trade. Currently, we are the largest trading partner of India in Europe, with a 6.4 percent market share. After launching the FTA negotiations, India and UK realized an increase in bilateral trade of up to 13.2 percent over the comparable period of 2006. This indicates that there have been significant impacts felt even before the completion of the negotiations.

Among the EU’s 27 member states, the UK aggressively pushes for the ongoing India-EU FTA. Globally, the UK is one of the leading centers for global banking, with the largest share of cross-border banking of eighteen percent in the world (Singh, 2010). In the year 2007, UK’s financial services trade surplus with India was €206 million with banks contributing €97 million (Singh, 2010). Similarly, the Indian banks aim at increasing their presence in Europe. Through this initiative, the Indian banks are aiming at tapping non-resident Indians’ market across EU member states. In addition, India is considered to be one of the largest remittance recipient countries in the world (Singh, 2010). Thus, there is the need for Indian banks to serve the lucrative business by increasing their presence in the EU. UK banks’ interest in the Indian market is serving the country’s three niche market segments. Among these segments are up-market consumer retail, finance, wealth management services, and investment banking.

Expansion of markets

Through these negotiations, both countries will contribute to the creation of strategic markets. As such, India represents the largest growing economy in Asia whereas the UK is among the largest EU leaders in both external and internal foreign investment flows. Similarly, India is on the trail to become one of the world’s economic heavyweights. Hence, the UK cannot afford to disregard the economic opportunities in India. As compared to other emerging economies such as China and Brazil, India’s greatest advantage in the marketplace is its large pool of educated and skilled English-speaking workers. With these human resources, India offers our firms great investment opportunities and collaboration. This can be realized if our firms collaborate with the Indian partners through outsourcing, joint ventures, a market of intermediary products, and access to a wide market for consumer goods (Banerjee, 2005). In addition, our country will benefit in the future from many intrinsic advantages currently driving India to be among the world’s competitive traders. Compared to other UK’s economic partners, India has the youngest population of the working-age, with more than 50 percent of its population under the age of 25 by the year 2020. The average age in India is expected to be 29 years old compared to 45 in the UK in the next decade (Marques, 2009). This will not only supply the Indian economy with competitive labor but will also provide the country’s industries with a sufficient workforce.

Another crucial feature of the ongoing negotiations between India and EU members is aimed at providing a liberal, attractive, and investor-friendly climate (Marques, 2009). Through this act, the foreign capital flow will be enhanced. The negotiation recognizes the need to endorse long-term investments aimed at generating stable employment opportunities and sustainable growth between India and EU members. Through the FTA agreements, the involved parties developed certain principles aimed at improving markets for both local and international investors, fostering transparency, and improving the flow of payments and investments related to capital movement (Marques, 2009). The United Kingdom, being a significant member of the EU, is bound to benefit from these investment opportunities, hence improving its economy significantly.

Improvement of procurements

Similarly, the ongoing FTA negotiations examine how to improve the shared market access by increasing international commitment to procurements (Marques, 2009). In doing so, the UK strongly believes that after the negotiations, the outcome will lead to a review of the procurement policies. Therefore, this will ensure that money is spent transparently and equitably. With an efficient tendering framework, public and private authorities will not only tap the financial and technical potentials but will also save on the costs of operating their businesses. Additionally, through open procurement methods, the UK and other EU companies based in India will have unhampered access to a larger market in the region.

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In the long term, FTA agreements between EU members and India will have a positive impact on European exports. With an increase in EU exports, UK’s economy will increase significantly because of trade gains adding to better allocation of resources (Achterbosch & Kuiper, 2008).


To conclude, UK objectives in FTA relations being negotiated between EU members and India is to facilitate the development of international trade. Through this process, both countries will promote transparency, simplicity of trade procedures, save time, and preserve money for businesses. Procedural barriers in export have been a burden for SMEs in both countries. After the completion of these negotiations, trade facilitation measures will not only reinforce security but also promote higher customs revenues and a better investment climate (Vagadia, 2007).


Achterbosch, T., & Kuiper, M. (2008). EU-India free trade agreement a quantitative assessment. The Hague: LEI Wageningen UR.., pgs.83-102.

Banerjee, D. (2005). EU – India relations: beginning a new era: a seminar report. New Delhi: Konrad-Adenauer-Stiftung.., pgs.22-34.

Bava, U. S., Grevi, G., & Vasconcelos, A. (2008). Partnerships for effective multilateralism: EU relations with Brazil, China, India, and Russia. Paris: Institute for Security Studies, European Union.., pgs.6-37.

Bindi, F. M. (2010). The foreign policy of the European Union assessing Europe’s role in the world. Washington, D.C.: Brookings Institution Press.., pgs.45-67.

Marques, H. (2009). Integration and globalization: challenges for developed and developing countries. Cheltenham, UK: Edward Elgar.., pgs.33-56.

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Mataritonna, C. (2006). Overview Of HLTG Activities. Report of the EU India High Level Trade Group to The EU-India Summit. Web.

Singh, K. (2010). India-EU FTA: Rethinking Banking Services Liberalization. Briefing Paper. Web.

Vagadia, B. (2007). Outsourcing to India – a legal handbook. Berlin: Springer.., pgs.14- 23.

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