UK firms can offer services in India without local presence
What's the story
The UK and India's Comprehensive Economic and Trade Agreement (CETA), signed on July 24, will allow British companies to provide services such as telecom and construction in India without a local presence. The agreement was signed in London and is expected to take about a year for implementation, pending approval from the British Parliament.
Trade agreement
Full national treatment for the companies
The CETA is a major chapter in the trade relationship between India and the UK, with both countries being strong in different kinds of services. The Indian commerce ministry said, "UK companies can now provide telecom, construction and related services in India without establishing a local presence, enjoying full national treatment." This means British firms will be treated on par with Indian companies under this agreement.
Economic impact
Trade surplus of $6.6 billion with UK
India enjoys a trade surplus of around $6.6 billion with the UK, with services exports at $19.8 billion and imports at $13.2 billion. The CETA gives UK firms access to 137 sub-sectors in India, while India has committed to 108 sub-sectors for British firms. These include accounting, auditing, financial services (with FDI capped at 74%), telecom (100% FDI allowed), environmental services, and auxiliary air transport services.
Sector protection
Pact protects sensitive sectors like dairy, rice, sugar
Commerce and Industry Minister Piyush Goyal has said that the CETA protects India's sensitive sectors such as dairy, rice, and sugar. He called it a "phenomenal free trade agreement" with "zero compromise and extensive benefits." The pact also opens up opportunities for India to engage more deeply with developed nations. It will especially benefit labor-intensive industries like textiles, footwear, gems, and jewelry.
Professional benefits
Social security arrangement for Indian professionals in UK
The CETA also includes a social security arrangement for Indian professionals on short-term contracts in the UK. This will allow them to contribute to India's provident fund instead of paying the UK's national insurance contributions. However, legal services are not included in this agreement. The deal also opens up India's automobile sector, but Goyal said it had been done intelligently to protect India's interests.