Benefit from UK trade deal India One report said a deal with the US could be equivalent but could put the economy at risk of stiff competition.
The Resolution Foundation thinktank said the successful talks between London and New Delhi had the potential to gain “first-mover” gains in India and replicate the success of German manufacturing exporters in China.
But the report said there was a risk of UK commercial services firms – one of the economy’s strongest sectors – being undercut by low-cost Indian rivals in the repetition of Chinese competition hollowing out US manufacturing.
India has traditionally been one of the hardest-hit markets, but is projected to become the world’s largest importer by 2050. Anne-Marie Trevelyan, Secretary of International Trade, open communication With India’s Minister of Commerce and Industry Piyush Goyal earlier this month.
The move is part of a pivot towards trade with Asia following Britain’s exit from the European Union and slow progress in talks with Washington. Britain is demanding become a member of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) – an 11-nation grouping that includes Japan, Chile, Australia, Canada and Singapore.
Sophie Hale, principal economist at the Resolution Foundation, said: “While much of the attention has been focused on becoming the first European country to join the vast CPTPP area, the huge potential economic benefits and risks lie in the vast, rapidly growing trade. , but the Indian economy is still relatively closed.
“Trade liberalization with India is expected to boost UK manufacturing in the short term, but could also benefit commercial services, where UK firms already enjoy a competitive advantage, and where demand is set to grow “
The Hale report noted that UK firms exporting to India currently face far higher tariffs (on average 19%) than those in the US (2%), giving greater scope for trade liberalisation. Is. Achieving a free trade agreement with India could give UK firms a first mover competitive advantage over firms exporting to the US and EU, which do not have preferential access to the Indian economy.
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India is projected to become the world’s third largest import market by 2050, while its demand for trade, telecommunications and computer services – sectors where UK export companies are already doing well – is expected to triple during 2020. Is.
Hale said, “But India is changing as well as growing, so any trade deal means acknowledging the uncertainty about the competition that UK firms will face, the lack of access to a rapidly growing market.” As for the price.”
The report noted that India had a comparative advantage in exports of trade services – particularly the high-end business services sector clustered in London and the South-East.