A long time coming… But the UK and India finally have a CFTA to be proud of

It’s certainly been a long time coming (anyone remember Boris Johnson?), but late last month the UK and India finally signed a Comprehensive Free Trade Agreement (“CFTA”); and, subject to ratification by both countries (more or less a foregone conclusion), the agreement will significantly cut existing tariff rates (by an average of 90%), sweep away a slew of legacy trade barriers, and significantly enhance frictionless market access (www.gov.uk/government/collections). Obviously, that has to be a good thing, not least because bilateral trade volumes between the two countries are now predicted to increase annually by £25.5 Billion over the medium term (with Whitehall sources estimating UK GDP alone will increase by £4.8 Billion (simply by reason of the CFTA being signed at all)).

And, of course, India is already the fifth largest economy in the world (by GDP), so this new deal will further facilitate its expected rise to third in the world by 2030. The UK is certainly not doing any of this without a serious expectation of economic gain (see above); and why on earth shouldn’t it, bearing in mind India is already the most populous nation on the Planet, with an increasingly urbanised and aspirational population: wealthier and more ambitious than ever before: precisely the type of partner anyone in their right mind would want to hitch their star to.

But what exactly are the key takeaways from this behemoth deal, and what should we pay particular attention to?

Well, there are (at least) four important elements:

1. UK farmers and agri-entrepreneurs are now able to export lamb into India at a zero tariff (down from 33%). Beef isn’t included in the deal at all, but that reflects a cultural embargo on the Subcontinent’s consumption (cows being sacred in Hindu India). Pork and (for purely secular reasons… more of which in a moment) Dairy Products are also excluded from the CFTA. And, on a more hedonistic level, whisky and gin will immediately attract a reduced 75% tariff (from day one): down from 150%, with further staged reductions planned to hit a base target of 40% within the next ten years. That should at least please Indian farmers and agricultural workers, enjoying a well earned sundowner after a day’s work in the fields.
   
   
2. Unsurprisingly ESG has raised its head under the CFTA too: including entire new trade chapters on improved animal welfare rights, labour rights, and a raft of anti-corruption measures (albeit that’s something of a throwback to the bad old days…Prime Minister Modi having long since taken that particular shibboleth by the throat, with strikingly successful results).
   
   
3. The Agreement reaffirms the UK and India’s mutual commitments to a series of Environmental treaties, including the Paris Climate Accords (https://unfccc.int/process-and-meetings/the-paris-agreement); and that’s especially pleasing, bearing in mind the public proclivity and obvious lack of ambition of the current occupant of the White House when it comes to climate change policies. There will also be new measures for tackling air pollution, introducing better oceanic management, and implementing a new, practical, recognition of the pressing need to secure a sustainable future for our precious planet…so hurrah for all of that as well.
   
   
4. And obviously, bearing in mind India’s growing importance as a global technology hub, there are entire sections in the CFTA dealing with Technology and Digital Innovation: 

For example, the CFTA has a chunky Innovation Chapter, designed to catalyse improved collaboration between the UK and India, as well as introduce a framework for future regulatory cooperation (including creation of steps to improve supply chain resilience…something which is assuming ever greater importance in our closely connected world). Digital Trade features heavily too, and there’s also an Intellectual Property Chapter, which seeks to improve existing patent procedures and enhance commercial transparency going forward. All of which is a good thing too.

So, in short, it’s been a long time coming… but thank goodness the CFTA is finally here. It's something to celebrate at last.

Red Ribbon Asset Management (www.redribbon.co) was established more than a decade ago to harness the full potential of India’s fast evolving and emerging markets: meeting the demands of global communities as part of a circular economy, whilst at the same time recognising the compelling demands of planet people and profit.

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Red Ribbon Asset Management (www.redribbon.co) aims to harness the full potential of fast evolving and emerging technologies to meet the needs of global communities as part of a circular economy, fully recognising the compelling demands of planet people and profit.