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Current Affairs

India-UK free trade agreement negotiations

Date: 18 January 2022 Tags: World Economy


A formal negotiation for Free Trade Agreement (FTA) has been launched by India and the United Kingdom.



Currently, the focus would be to avoid sensitive issues, covering only about 65% goods and 40% of services.



Such deals are known as harvest deals and India is currently negotiating them with Australia, UAE, Canada and Israel.


Early harvest pacts

  • Opening bilateral trade between two countries on a restricted list of goods and services is known as early harvest trade. It can be later extended for full fledged FTA.

  • These pacts target only easy and non-controversial aspects, leaving tougher goods and services for later. The complete FTA will be delayed in such instances.

  • India had completed early harvest pact with Thailand in 2004 but has been unable to wrap up FTA. Similarly, FTA with Sri Lanka could not be completed in services.

  • These pacts are used tactically so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.



  • Only early harvest pacts would attract challenges from other countries of WTO. This is because, full FTA is the only exception to WTO rules.

  • Early harvest deal may reduce the incentive for one side to work towards a full FTA as they may get benefits early.


Current FTAs by India

  • India is working on FTAs with a number of countries including Australia, US and EU. It also has PTAs with several countries.

  • The existing FTAs are comprehensive and cover goods, services, investment, IPR, etc. India is reviewing existing FTAs with South Korea, Japan and ASEAN on the ground of India’s rising trade deficit with these trading partners.