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Local Content Emphasis in India-UK Trade Deal

With the recent conclusion of the Free Trade Agreement (FTA) between India and the United Kingdom, it is crucial to ensure that the goods exchanged between the two countries contain adequate local content. This measure aims to prevent Chinese products from infiltrating the markets through loopholes, as highlighted in a report by Canara Bank.

The report stresses the importance of implementing stringent measures to verify the origin of goods. It states, "To safeguard against Chinese goods exploiting lower duties, it is essential that the traded items between the UK and India possess sufficient local content."

Describing the FTA as a significant achievement for India, the report notes that the nation has gained duty-free access to 99% of its tariff lines in the UK market, which is expected to greatly benefit Indian exporters. However, it also warns that without robust rules regarding origin and content verification, the agreement could be exploited.

Regarding sensitive sectors, the report mentions that agriculture and dairy products have been excluded from the FTA.

Implications for Sensitive Sectors

These sectors have been a point of contention in India's negotiations with other key partners, including the European Union and Australia. The report cautions, "The exclusion of agriculture and dairy from the FTA is a contentious issue in our discussions for similar agreements with the EU and Australia. Any concessions in these areas in future FTAs could undermine the benefits achieved from the UK agreement."

Financial Services and Reciprocal Treatment

On the topic of financial services, the report indicates that both India and the UK will need to extend equal treatment to each other's banking and insurance sectors. This could facilitate British financial institutions in establishing a stronger foothold in India, while also providing Indian firms in the financial sector with enhanced opportunities in the UK.

The report concludes by stating that this mutual treatment in the financial sector addresses a long-standing issue in India-UK economic relations and could lead to more profound collaboration between the two nations.

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