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HomeRegulatory mismatch in services sector challenge for India-UK FTA: Official | Business...

Regulatory mismatch in services sector challenge for India-UK FTA: Official | Business News

Lack of alignment with global standards in the services sector and resistance to foreign competition are among the key obstacles hindering India’s efforts to strike deals with world leaders. Global service leaders such as the European Union and the United Kingdom (UK) aim to promote employment in the service industry. country, a government official told The Indian Express.

However, India is “on the same page”. free trade agreement (FTA) is partnering for the mobility of business professionals as there is a strong demand for Indian professionals in the UK and European businesses, the official said, adding that India needs mobility in business so that goods and services move smoothly and “no one disputes that” . Trade agreements in the services sector are important because India’s services sector contributes more than 50% to gross domestic product but growth is not comprehensive as this sector attracts less than 1 million people. /3 Indian workforce, largely due to outdated regulations and barriers about foreign direct investment (FDI).

“A lot of integration happens when you sign a service agreement. It has a multiplier effect. It has the potential to boost overall economic activity. But there is a lot of resistance to opening up. India’s approach was adjusted 10 years ago but we remain cautious. Integration will bring limited benefits if we are too tight-lipped,” said an anonymous official.

Citing the example of legal services continuing to resist opening up the sector, the official said that if a British law firm sets up shop in India, it will provide jobs to these students. Graduates from Indian law universities find limited opportunities.

“When our workforce comes into contact with an international law firm, they get jobs anywhere in the world. Indian multinationals looking for legal services also face difficulty in accessing this service. Only six to seven law firms control the business. They charge a lot of money. If any service is opened in both ways, the numerous young talents will get better opportunities,” the official added.

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Arpita Mukherjee, professor at ICRIER said: “During our research on Invest India, we found that restrictions and requirements imposed on FDI flows were a concern for some of our trading partners. us because it negatively impacts their global business model. This could have a negative impact on market access negotiations in the FTA because our policy appears more restrictive than it actually is. For each field, it is necessary to reform FDI regulations.”

India’s restrictions on brand-based retailing are not easily understood by foreign investors, said an expert who spoke on condition of anonymity. “Such a structure is inconsistent with the standards followed globally. While there is no cap on FDI in single-brand retail in India, there is a 51% cap on multi-brand retail in India along with many others,” the expert added . “Another limitation that foreign players are concerned about is e-commerce. While India allows a marketplace-based e-commerce model where the e-commerce entity acts as a facilitator between the buyer and seller, we restrict the e-commerce model based on on inventory where goods and services are owned by the e-commerce entity and sold directly to consumers,” the expert said.

According to official data, the proportion of total FDI inflows into the service sector leans towards one sector. While the computer software and hardware sector received 42.59% of total FDI in services, the share of retail trade was 1.38%. The rates were as low as 0.25% for agricultural services, 1.97% for the hospitals and diagnostic centers category, and 0.91% for the consulting services category.

On the issue of movement of experts, the official said the immigration debate and the ongoing FTA discussions in the services sector are completely different issues. “India’s position has always been clear. Even businesses in the UK are looking for talent and skills. We’re talking about business mobility as opposed to immigration. We are also looking to retain talent. But for goods and services to move smoothly, we need business mobility and no one disputes that,” the official said.

Last year, former UK Home Secretary Suella Braverman controversially said that Indians were the largest group of overstayers in the UK, exacerbating the country’s immigration problem. Braverman was fired from her post in November this year following her comments about pro-Palestinian protests in London.

Touching on issues related to the delay in signing the deal, the official said it would have taken several years to sign the deal earlier and the India-UK FTA would be a “landmark deal ” and a comprehensive agreement, which is why it takes time. “While India has a static government, the political situation in the UK has undergone significant changes over the past few years,” the official added.

© Indian Express Pvt Ltd

Originally published on: 25-12-2023 at 05:00 IST

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