India can expect UK-FTA
India is likely to increase its trade into the United Kingdom, which is expected to accelerate bilateral trade agreements with trading partners to offset the impact of any loss of business following its exit from the European Union.
An India-UK Free Trade Agreement (FTA) could give fillip the slowing trade between the two countries post-Brexit, said the Development Bank of Singapore (DBS) in its daily reports on markets and economics.
The UK is likely to explore direct bilateral trade agreements with other trading partners including India, it expected.
This might provide an alternate route to India, in comparison to the tough and the drawn-out negotiations on the EU FTA, DBS pointed out.
The UK accounts for 15 per cent of India’s total merchandise trade, but its share has been declining.
Trade in services has also eased, but particularly for the information technology sector, about 17 per cent of India’s service exports heads to the UK, second only to the United States, according to the Nasscom.
Investment links are meanwhile notable, DBS pointed out.
UK is the third largest inward investor into India, after Mauritius, and Singapore, with cumulative Foreign Direct Investment equity investments of USD22.7 billion (from April 2000 to December 2015), or eight per cent of the total FDI inflows.
In turn, India is the third largest investor in the UK based on the number of projects.
Indian businesses that tap the UK domestic markets are unlikely to face many challenges.
However, firms that intend to utilize UK as a base to gain access into European markets, might have to rethink plans.
A risk here is the imposition of trade barriers, scrapping preferential rates and higher taxes between UK and the rest of EU, which might pose a hurdle for foreign companies to invest in the UK.
These factors could slow investment flows from India to the UK, until more clarity is available in this regard, believes the bank. fii-news.com
