India and the UK may look at a free trade agreement (FTA) only after Britain’s formal exit from the European Union, finance minister Arun Jaitley said after holding discussions with UK Chancellor of the Exchequer Philip Hammond at the 9th UK-India economic and financial dialogue.
Jaitley said India in its communication with the UK government has stated that post Brexit it will look for more open trade, and more trade arrangements. “Obviously these can be formally discussed after the Brexit takes place but it is probably going to imply a far wider and a far higher level of engagement between the two countries. What shape it is going to take can only be formalised post Brexit negotiation,” Jaitley told reporters.
The two countries agreed to set up a fund worth 240 million pound to finance clean energy projects in India. The fund will see investment up to 120 million pound each by the two countries in the joint fund, with aim to raise it to around 500 million pound. The fund will be known as Green Growth Equity Fund and will be a sub-fund of National Investment and Infrastructure Fund (NIIF).
“This is a relationship between equals. We share a common legal system and a common language of business. India is a major investor in UK and UK is one of the top investors here,” Hammond said.
Hammond said the two nations have very significant trade and investment relationship, with Britain being the largest G20 investor in India in the last 10 years, while India has been the third largest investor in the UK.
“We have continued to consolidate past success and to identify new areas where we can work together over the next couple of years, preparing for the point where Britain leaves the EU and is able to engage with Indian colleagues in a deep discussion about a future FTA between the UK and India,” he said.
On its part, India said that a formal dialogue on a possible bilateral trade agreement can start only after the completion of Brexit, which is expected to take about two years. British Parliament last month approved the Brexit Bill, paving the way for exit of the United Kingdom from the EU.
When asked about Vijay Mallya and Lalit Modi, Hammond said: “In one of the cases concerned (Vijay Mallya), an extradition request has been placed. That is not something, I am afraid, I’ll be able to discuss…it will be proper for ministers to discuss. It is a matter before courts.”
Regarding the Green Growth Equity Fund, the two countries in a joint statement said that the fund’s initial investments will be focused on energy and renewables market and a “fund manager would be selected by autumn”. “Progress will be accelerated by starting the process of appointing a fund manager now with early market engagement via the publication of a blueprint with the aim to identify additional and complementary sectors for fund investments,” the joint statement stated.
The two countries also discussed about making rupee more freely tradeable in international markets, and promote ‘masala’ bonds. The two finance ministers welcomed the proposal of NHAI to issue a masala bond in London in next few months along with IREDA’s plans to issue a green bond in London and list their masala bonds on the London Stock Exchange within six months.
They also looked forward to other Indian entities, including Energy Efficiency Services Limited (EESL) and Indian Railway Finance Corporation(IRFC) preparing to issue Masala Bonds in London in the coming months, the joint statement said.
The UK is among India’s major trading partners and in 2014-15, it ranked 18th in the list of India’s top 25 trading partners. As per the Department of Commerce data, two-way merchandise trade during 2014-15 was $14.33 billion, marking a decrease of 9.39 per cent as compared with 2013-14.