No Entry, No Deal – Without more visas, UK FTA makes little sense for India

Source: The post is based on the article “No Entry, No Deal – Without more visas, UK FTA makes little sense for India” published in The Times of India on 23rd January 2023.

Syllabus: GS 2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Relevance: About the process of visa liberalisation.

News: Recently, the UK international trade secretary pointed out that the country left the EU because it does not believe in the free movement of people. Further, visa liberalisation under the proposed India-UK FTA is also not up for negotiation. This poses challenges to the India-UK FTA.

Why visa liberalisation is essential for India-UK trade?

-The two-way trade between India-UK in 2021-22 was $17. 5 billion, lower than India’s trade with Germany or with Belgium. India’s overall merchandise trade with the UK was less than 2%. Free movement of skilled labour and students between India and the UK could have provided an incentive to quicken the pace of negotiations.

-Access to India’s huge market appears to be the UK’s primary incentive for UK. An FTA which lowers tariffs for British exporters helps the UK.

But with UK tariffs already low, India can gain only from visa liberalisation.

What needs to be done to facilitate India-UK FTA?

FTAs require tradeoffs. Some domestic interests have to be set aside in the pursuit of larger gains from lowering barriers to trade. Similarly, the UK have to revisit its visa liberalisation policy.

What India should do?

The UK and Australia already have a regime of unfettered movement for young people, including job seekers. Against this backdrop, India should work on other potential FTAs like the ones with the EU and US as gains from these FTAs are far greater than anything on offer by the UK.