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C’mon, India-UK FTA! A European gateway

India and Britain are trying to bridge differences on the most contentious items of an FTA that include imports of Scotch whisky and British cars, access to legal and financial services, easier intra-company mobility of employees and investment protection. India is the world’s biggest market for Scotch, and negotiations over duty reduction timelines could find common ground because the bulk of it goes into producing local whisky. British cars cater to a price segment entirely different from that served by automobiles made in India and import duty relaxation, though nettlesome, is not impossible.

Legal services are opening up gradually to foreign players, and the treaty could become the prototype for other countries seeking a bigger role in the Indian market. India is not seeking mobility of labour on a scale to affect Britain’s immigration policy, a political hot potato. Investment protection, part of a separate agreement, need not be a casualty of India’s insistence on local legal remedies before international arbitration.

An early deal with Britain could clear the way for an FTA with the EU also being negotiated. The themes are broadly common with India seeking preferential treatment for services, in which it has the advantage, in return for access to manufactured goods and select services like banking and insurance. India’s localisation requirements and its history of disputes with foreign investors result in demands for heightened protection through external agencies. If the treaty with Britain is hammered out this month, India will have made considerable progress in its engagement with Europe, its second-biggest destination for exports. European investment in India also trails those in Brazil and China, a situation New Delhi will want to rectify.