This is the first comprehensive trade deal with a key western advanced economy. What kind of opportunity does it offer to Indian industry?
This is the first real pact signed between two large nations where the economies are of a similar size, $3.5 trillion. It is a Western world economy and has a number of technologies which are very useful right out. The Indian market is very important for UK companies and equally, India needs to step up its game in the UK.
While so far the trade between the two countries was $56 billion, which makes it a fairly large trading partner, the ambition of both our Prime Ministers is to more than double this in less than five years. So, taking it to $120 billion dollars by 2030 is an ambitious target.
We have gained a three-year exemption on social security payments. I believe the estimates are about Rs 4,000 crore of savings for the Indian industry.
It’s a win-win for both sides. I hope the investments will step up now.
The deal offers market access to the UK in a number of sectors. How do you see it impacting the domestic industry?
Firstly, in India we don’t have blockages like in the 70s and 80s when imports were restricted. Everything is open for imports. The question is really on tariffs. Tariffs between India and the UK were not that high. The UK is a sizable market with (a population of) 65 million. India is a continent of 1.5 billion people. This is the kind of market that any Western world would be happy to access on favourable terms. And this is what the UK gets. But in turn, what do they need to do? Set up more factories, more manufacturing in India, step up investments, maybe do some acquisitions, because in the UK, manufacturing is not as competitive as it is in India. Equally, there is a pool of talent available in India, in abundance.For Indian companies, they can now come and acquire companies in the UK. There are a lot of gems sitting out here. They have been weak in their valuations because of low local demand. And now bridge it with India. And you’re seeing TVS Motor coming and buying; we have come and made some investments here. Tata’s Jaguar Land Rover is sending cars to India now. It will now become better for them to send at a lower duty. I would say this is a really well-crafted trade deal.
Which are the top sectors in India that you see benefitting from this deal?
Firstly, I would say the high-tech area, especially defence — hypersonic missiles, UAVs, drones, these technologies that are in the UK at a very advanced level. The UK is a very advanced Western defence manufacturing nation, whether it’s fighter jets or UAVs. It has a lot of technology sitting here, which India will have access to now. We can expect deeper cooperation, different partnerships, including hopefully in the area of space.
Second is SME, which is at the other end of the spectrum. We had leather, leather footwear, handicrafts and small hand tools, machine tools, and small automobile parts which are required in the UK. All these in India will now get access into the UK market on a preferential basis at very low or almost nil duties. We have also successfully protected certain sensitive sectors, for example agriculture.
How do you see this deal playing out in trade negotiations with the US?
India has done quite a few FTAs — with the European Free Trade Association, Australia, the United Arab Emirates. The trade deal with the UK to my mind is the first big western one, and this will set the roadmap for talks with the European Union. I hope that in the coming weeks and months, the EU will start to take shape.
The US is altogether a different ballgame. The Indian government is keenly negotiating various issues that are coming up there. It is not an easy task to have a free trade agreement or a comprehensive trade agreement with a large market like the US, which can not only take a lot of things from you, but also send a lot of things back into your country. So, one will have to take a balanced approach, a more nuanced approach. But I think there seems to be an urgency. But I think all these agreements, like the UK, will add to India’s strength.
Can we say goodbye to multilateralism? Are bilateral deals the only way forward?
We are in a new world. Even in the first term of Donald Trump, we could see multilateralism getting weakened. And, in the second term, much more of that. I don’t know how much relevance the WTO will have. But it seems more and more, bilateralism is going to become fashionable.
Is your group looking to increase stake in BT, or stepping up investments in the UK?
I have had the privilege of working on some back channels for this deal as well. Our investments in the UK help us have a voice on the table. We have big investments in the hospitality, real estate sectors, British Telecom, which is an iconic British company and, of course, OneWeb. We remain pretty agile in the UK market and we look for opportunities in growing our investments in key sectors.
Will we see Bharti increasing its stake in BT?
No, we are inside BT now. We are the single largest shareholder with 25%. My relationship with the chairman and CEO and some of the board members is outstanding. We work with them, we have given them a number of suggestions, which they like. They had visited India with a big delegation to see how we operate.
I think there are lots of things that BT can pick up from Airtel in India. But, equally, we are also seeing some of the stuff that they are doing. For example, in open ridge, the way they do the trenching, the connections they have at homes. So, this is going to be a nice cooperation between the two companies where the bridge is Bharti Enterprises, which has a controlling stake in Airtel in India and an influential stake in BT.
Content Source: economictimes.indiatimes.com