With Britain deciding to exit from the European Union, India will have to rework the proposed free trade agreement with the single-currency bloc, a top government official has said.
"My interest will get changed because number of tariff lines (products) will change (now). I will calibrate and the EU will also calibrate. Now they would reassess and we will also be going to reassess," Commerce Secretary Rita Teaotia told PTI.
She was replying to a question about the impact of Brexit on the ongoing negotiations between India and the EU on free trade agreement.
Teaotia said recalibration is required as some items of interest to Britain may have to be removed.
On the FTA issue, Commerce and Industry Minister Nirmala Sitharaman said: "I would think, they (EU) would need time now to assimilate this outcome. Once they assimilate the outcome, they will only then respond...I will talk to my counterparts."
Launched in June 2007, the negotiations for the proposed Broad-based Trade and Investment Agreement (BTIA) have seen many hurdles with both sides having major differences on crucial issues like intellectual property rights, duty cut in automobile and spirits and liberal visa regime.
Sitharaman and European Union Commissioner for Trade Cecilia Malmstrom had met in Paris earlier this month and discussed issues including possibility of resuming the long stalled FTA negotiations.
The talks have been held up since May 2013 as both the sides are yet to bridge substantial gaps on crucial issues. Although top officials from both the sides have met, but they have not yet fixed any date to resume the talks.
Talking about the impact on Brexit on trade, the secretary said that it will not have any immediate impact.
"Brexit will not impact our trade with the UK. With EU also, nothing directly affects our trade. In long term, we would be interested to see how UK negotiates its exit from EU," Teaotia said.
Sitharaman also said the first impact would be visible on currency volatility as there is a possibility of devaluation of the pound and euro.
"So the impact of volatility of the currency is something which might have an immediate impact on our exporters," the minister told reporters.
She said India is in a position to face the eventuality of this outcome.
"We will however have to keep watching currency based volatility, both in the short and the medium term and also look at the impact on overall trade itself," Sitharaman said.
The bilateral trade between India and the UK stood at USD 14 billion in 2015-16 as against USD 14.33 billion in 2014-15.
India has received USD 23.10 billion FDI from Britain during April 2000 and March 2016.
Two-way trade between India and the EU dipped to USD 88.4 billion in 2015-16 from USD 98.5 billion in the previous fiscal.
When asked about any impact on investments from the EU or the UK, Sitharaman said investments depend on the strength of an economy and "our economy is sound and clear".
"We are attracting investments and I think that has not come down. However, London being the financial capital of the world and now it is outside the EU, the impact of the decision (will depend) on how pound is going to recover," the commerce minister said.
"Again within EU countries, the UK is the third largest trading partner of India. Now as we move forward, what impact that is going to have is something which we will keep watching. I hope there will be more opportunities for us to expand," she said.
She added that India's economic fundamentals are strong and the country's position will remain sound.
"If there will be any short-term change, it may happen because of currency fluctuation," Sitharaman said adding "I expect, it would not have any major impact on investments and exports".
In the meantime, Tirupur Exporters' Association (TEA) said it appropriate time for India to commence negotiations with the UK for Free Trade Agreement (FTA).
India has been facing a lot of issues like TRIPS, pharmaceutical, automobile, visa including movement of professionals which are actually stunting the negotiations to have FTA with EU, which consists of 28 countries including the UK, TEA president, A Shaktivel said.
"The exporters feel that when we start negotiations with the UK immediately for FTA, we could get the early bird advantage and could increase our trade significantly," he said in a statement.
With regard to garment sector alone, Tirupur's export share to the UK is 10.62 per cent with a value of Rs 11,798 crore out of total garment exports of over Rs 1 lakh crore from our country, he said.
"We are confident that India being a favored nation to UK, India could clinch the deal and have a FTA with UK in the coming months," he added.
