Congress raises 'serious questions' on impact of FTA likely to be signed during Modi's UK visit

Among the most significant consequences would be on the micro, small and medium enterprises (MSMEs), Congress said.

New Delhi: With an India-UK free trade agreement likely to be signed during Prime Minister Narendra Modi's visit to Britain, the Congress on Wednesday claimed that serious questions have emerged on its impact on India's domestic industry.

The opposition party's attack came after Prime Minister Modi on Wednesday left on a four-day visit to the UK and the Maldives, expressing confidence that this would boost India's ties with the two countries.

Congress general secretary in-charge communications Jairam Ramesh said, "The Super Premium Frequent Flier jets out of India again today -- this time to the UK and the Maldives. The London trip is for the signing of the India-UK Free Trade Agreement (FTA), which will in fact have pernicious consequences for numerous stakeholders."

"Among the most significant consequences would be on the micro, small and medium enterprises (MSMEs), which are the backbone of India's economy, the largest employers of India's workers, the object of neglect and the subject of distress in the last 11 years of the Modi Government's policy of favouring a couple of big business groups, Ramesh claimed in a post on X.

He said automobile manufacturers will similarly be impacted, as will the pharmaceutical industry.

Citing the key issues that have been raised by the noted Delhi-based think tank Global Trade Research Initiative (GTRI), Ramesh said the FTA would allow British firms to participate in the procurement of goods and services of non-sensitive central government entities.

This opens up a huge market of an estimated "$600 billion to UK firms, he said.

"This FTA is a marked shift in government policy -- previously, India had kept government procurement out of trade deals. This is one of the last few remaining arenas of industrial policy available to India to spur local enterprises. That avenue is now endangered," Ramesh said.

"The Modi Government has agreed to cut car import duties from 100 per cent to just 10 per cent, marking our first ever auto tariff concession. This will undermine the already feeble Make in India narrative even further and lays the ground for similar concessions with trade partners like the US and the EU," he claimed.

This blow to the domestic industry comes at a time of a generational opportunity in automobile manufacturing due to the electrical vehicle transition, he said.

"For the first time, India has agreed to patent rules that go beyond the WTO's Agreement on Trade Related Aspects of Intellectual Property Rights. This is a historic shift in the Indian Government's policy and signifies a submission to the big pharmaceutical lobby," Ramesh said.

This will impact access to affordable medicines within India and endanger our position as a global leader in manufacturing generic drugs, he said.

"India has failed to secure an exemption from the Carbon Border Adjustment Mechanism (CBAM), which will allow the UK to impose carbon taxes on Indian products even as we grant them duty-free access. The same precedent will now roll over to the EU, with whom India is currently negotiating," he contended.

"Whatever the spin that will be given to the FTA by the peripatetic PM and his drumbeaters, serious questions have now emerged on the impact that this agreement will have on our domestic industry," Ramesh said.

In his departure statement, Modi said India and the United Kingdom share a comprehensive strategic partnership that has witnessed significant progress in recent years.

He noted that the collaboration between the two countries spans a wide range of sectors, including trade, investment, technology, innovation, defence, education, research, sustainability, health and people-to-people ties.

"During my meeting with Prime Minister Rt Hon Sir Keir Starmer, we will have the opportunity to further enhance our economic partnership, aimed at fostering prosperity, growth and job creation in both countries," Modi said.

The prime minister will also meet King Charles III during the visit.

Modi will then travel to the Maldives at the invitation of President Mohamed Muizzu.