December 27, 2023
3 mins read

‘Regulatory mismatch in services sector challenge for India-UK FTA’

An expert, on condition of anonymity, said that India’s restriction over brand based retail is not easily understood by foreign players….reports Asian Lite News

Lack of regulatory alignment with global standards in the service sector and resistance to foreign competition are among the chief deterrents in India’s efforts to strike deals with global services leaders such as the European Union and the United Kingdom (UK) that could boost services jobs in the country.

However, India is on the “same page” with free trade agreement (FTA) partners on movement of business professionals as there is a strong demand for Indian professionals in the UK and European businesses too, the official said, adding that India needs business mobility for smooth movement of goods and services and “nobody is disputing it”. Trade deals in the service sector assumes significance as India’s service sector contributes over 50 per cent to the gross domestic product but the growth has not been inclusive as the sector absorbs less than a third of the Indian workforce largely due to outdated regulations and barriers on foreign direct investment (FDI).

“A lot of integration happens when you sign a deal in services. It has a multiplier effect. It has the potential to boost overall economic activity. But there is a lot of resistance in opening up. India’s approach was calibrated ten years back but we have also been reticent. Integration will yield limited gains if we are too reticent,” the official said.

Citing the example of legal services that continue to resist opening the sector, the official said that if a British law firm starts a firm in India, it will offer employment to graduates coming out of India law colleges that find limited opportunities.

“When our workforce gets an exposure to an international law firm, they will get jobs anywhere in the world. Indian multinationals seeking legal services also find it difficult to get it. There are only six to seven law firms who control the business. They charge hefty money. Any service if they are opened in both ways, huge young talent will get better opportunities,” the official added.

Arpita Mukherjee, a professor at ICRIER said: “During our study for Invest India, we found restrictions and requirements put in place for FDI inflows has been a concern for a number of our trade partners as it adversely impacts their global business model. This may adversely impact market access negotiating in an FTA as our policy looks more restrictive than in practice. For each of the sectors, there is a need to revamp the FDI regulation”.

An expert, on condition of anonymity, said that India’s restriction over brand based retail is not easily understood by foreign players. “Such a structure is not in line with globally followed norms. While there is no cap on FDI in single brand retail trading in India, there is 51per cent cap on multi-brand retail in India along with multiple riders,” the expert added. “Another restriction that has been a concern for foreign players is in e-commerce. While India allows a marketplace based model of e-commerce where the e-commerce entity acts as a facilitator between buyer and seller, we restrict, inventory based model of e-commerce where inventory of goods and services is owned by the e-commerce entity and is sold to the consumers directly,” the expert said.

As per official data, the share of gross FDI equity inflows into the services sector is skewed in favour of one sector. While the computer software and hardware sector receives 42.59 per cent of the total FDI in services, the share of retail trading stands at 1.38 per cent. The share is as low as 0.25 per cent for agriculture services, 1.97 per cent in hospitals and diagnostic centers category and 0.91 per cent in consultancy services category.

ALSO READ: UK to increase family visa salary requirement in stages

Previous Story

UK economy faces another tough year ahead

Next Story

Cameron throws weight behind Rwanda Bill  

Latest from -Top News

Multi-alignment, upgraded

With US ties strained and China tense, New Delhi taps Europe’s harder edge for co-development, clean tech and strategic autonomy, writes Manoj Menon India is recalibrating its great-power hedging as frictions with

India-EU Trade Deal Breakthrough Soon?

Negotiators report increased momentum in discussions, which have been given a boost from US President Donald Trump’s tariff offensive…reports Asian Lite News India and the European Union aim to finalise a trade

Europe Seeks Peace in Gaza

European countries condemn Israeli interception of Gaza-bound flotilla, demand safety of citizens…reports Asian Lite News Israel’s interception of an international flotilla carrying humanitarian aid to Gaza has sparked condemnation across Europe, with

GAZA: Egypt to Host Peace Talks

Egypt hopes the discussions will help “end the war and the suffering of the brotherly Palestinian people, which has continued for two consecutive years…reports Asian Lite News Egypt will host Israeli and

‘My Injuries Made Me’

During his four-year battle with injury, the incumbent fast bowling spearhead made occasional appearances but couldn’t bear the workload and demands of red-ball cricket….reports Asian Lite News England tearaway Jofra Archer believes
Go toTop

Don't Miss

Major Job Demand in India by 2027

Expected to become a $100 billion industry by 2030, the

Minor among 15 Indian fishermen arrested by Lankan Navy

The navy also confiscated two boats of the fishermen. The