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India Pushes for Strong 'Rules of Origin' in UK FTA Talks to Protect Auto Industry

Updated: Sep 11, 2024 05:26:55pm
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India Pushes for Strong 'Rules of Origin' in UK FTA Talks to Protect Auto Industry

New Delhi, Sep 11 (KNN) India is emphasising strict compliance with 'Rules of Origin' in its ongoing Free Trade Agreement (FTA) negotiations with the United Kingdom, particularly in the automobile sector, Commerce Secretary Sunil Barthwal stated on Tuesday.

The government aims to ensure that these rules do not negatively impact India's automobile industry.

Addressing leaders of the auto industry, Barthwal highlighted the importance of creating a level playing field in the FTA negotiations.

"The FTA with the UK is in the pipeline...we are negotiating. We are very keen to ensure that while we open up the automobile market, we do not lose the level playing field with the UK,” he noted

“We've closely examined their Rules of Origin and communicated that these rules should not harm our domestic automobile sector," Barthwal added.

The 'Rules of Origin' provision stipulates that a minimum level of processing must take place in the FTA country, in this case, the UK, for the final product to be considered originating from that country.

This measure helps prevent third-party goods from being dumped into Indian markets under the guise of FTA concessions.

Instead, the exporting country must add significant value to the product before it can be exported to India.

Barthwal also emphasised that the government’s Production Linked Incentive (PLI) scheme for the auto sector should not be affected by the FTA.

The PLI scheme, launched in 2021 with a budget of Rs 25,938 crore, aims to strengthen domestic manufacturing, particularly in the production of advanced automotive technologies such as electric and hydrogen vehicles.

"The PLI scheme is for a defined period, and we have made sure that it will not be disrupted by the FTA until its term ends. It is a policy decision to ensure the sector reaps the full benefits of the PLI," Barthwal added.

The India-UK FTA talks, which commenced in January 2022, have experienced delays, with the 14th round of discussions stalling due to general election cycles in both countries.

Several issues remain unresolved, particularly in the goods and services sectors.

Indian industry is seeking greater market access for its skilled professionals, particularly in IT and healthcare, while also aiming for zero customs duties on several goods.

On the UK side, demands include reduced import tariffs on products like Scotch whiskey, electric vehicles, lamb meat, chocolates, and other confectionery.

The FTA covers 26 chapters, including trade in goods, services, investment, and intellectual property rights.

Additionally, the two countries are negotiating a bilateral investment treaty (BIT). Bilateral trade between India and the UK increased from USD 20.36 billion in 2022-23 to USD 21.34 billion in 2023-24.

Barthwal also highlighted significant export opportunities for Indian automobile manufacturers in markets like the European Union and Africa, where demand for two-wheelers, tractors, agricultural vehicles, and public transport is on the rise.

He acknowledged the challenges posed by U.S. protectionism but underscored the potential of the vast American market for Indian exports.

(KNN Bureau)

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