Free Trade Agreement (FTA):
India and the UK have launched the formal Free Trade Agreement (FTA) negotiations, that both countries envisage concluding by the end of 2022.
- Until then, both countries are contemplating an interim free trade area, which will result in reducing tariffs on most of the items.
- Both countries agreed to an early harvest scheme or a limited trade agreement to lower tariffs on a small set of goods apart from easing rules for select services.
- Further, they agreed to avoid “sensitive issues” and focus on areas where there is more complementarity.
- The agriculture and dairy sectors are considered sensitive sectors for India in trade talks.
- Also, a target of doubling the trade between India and the United Kingdom (UK) by 2030 has also been set.
Free Trade Agreement (FTA):
- It is a pact between two or more nations to reduce barriers to imports and exports among them.
- Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- The concept of free trade is the opposite of trade protectionism or economic isolationism.
- FTAs can be categorised as Preferential Trade Agreement, Comprehensive Economic Cooperation Agreement, Comprehensive Economic Partnership Agreement (CEPA).
