UK-India Investment Pact: Former FTA Negotiator Highlights India’s Potential for Growth and Increased FDI
India is increasingly recognized as a prime investment destination, with global firms showing confidence in its long-term growth potential, according to Harjinder Kang, the UK’s Trade Commissioner for South Asia. He noted that a proposed Bilateral Investment Treaty (BIT) could enhance investor confidence and attract more foreign direct investment (FDI) into India. Kang’s comments came on the day the India-UK Comprehensive Economic and Trade Agreement (CETA) took effect.
Kang emphasized that multinational corporations assess investment opportunities by weighing risks against potential returns. He stated, “People are making their judgments on India based on return on risk. It’s a huge growth opportunity.” The CETA, which began on July 15, allows zero-duty access for 90.2% of Indian exports to the UK and reduces import duties on various British goods.
India-UK Trade Treaty
Kang explained that the initial goal was to finalize a Bilateral Investment Treaty alongside the free trade agreement to offer additional protections for investors. He noted that investment protection was a key demand from British businesses during pre-negotiation consultations. Companies sought assurances for long-term investments and a mechanism to resolve disputes. Although the BIT was not concluded with the trade pact, discussions are ongoing, and both governments view it as vital to the India-UK economic partnership.
Kang believes that the BIT would significantly enhance security for companies hesitant to invest. He stated, “It will make a big difference that companies that have a little bit of reservation might then be feeling a bit more secure.”
Investment Relationship
Kang highlighted that India has become a favored destination for British companies, citing a major UK healthcare firm that recently set up a manufacturing facility in Madhya Pradesh. He also pointed out that investment flows are now reciprocal, with around 1,000 Indian companies investing in the UK over the past four to five years, making India the second-largest source of investment projects in the UK after the United States.
According to Kang, a Bilateral Investment Treaty would provide greater certainty for investors in both nations and promote cross-border investments. He added that the implementation of the India-UK FTA should be seen as the start of a broader economic partnership, with investment, technology, defense, education, and climate issues shaping future India-UK relations.
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