October 28, 2020
The 10th Economic and Financial Dialogue (EFD) took place virtually between representatives of the Finance ministry from India & UK.
This agreement focussed on financial services, sustainable finance, and infrastructure development.
India and the UK together are in the top 7 countries of the world contributing over US$5 trillion to global GDP.
The EFD and other such future discussions seem promising for global trade and investments.
On 28th October, 2020, the Union Minister for Finance, Smt. Nirmala Sitharaman, along with other representatives from Ministry of Finance, RBI and Securities and Exchange Board of India (SEBI) met with the Chancellor of Exchequer, Mr Rishi Sunak, UK, and other representatives from Her Majesty’s Treasury, Bank of England and Financial Conduct Authority (FCA) UK for the 10th Round of Ministerial India-UK Economic and Financial Dialogue (EFD) via video-conferencing.
During this, the two nations signed agreements on financial services, infrastructure, and sustainable finance. It is aimed at boosting job opportunities and investments in both countries while building economic ties. The dialogue concentrated on working together to lead global economic recovery and rehabilitation post the pandemic.
India and the United Kingdom enjoy close bilateral relations in diverse areas. India-UK economic ties are important as together they are two of the world’s top seven economies with a combined GDP of over US$5 trillion. India-UK trade has more than doubled since the first EFD in 2007, with bilateral investment supporting over half a million jobs across both countries. Among other things, the two nations shared responses to the pandemic, discussed enhancing the Financial Services Collaboration with special emphasis on Fin-Tech and GIFT City, establishment of an annual India-UK Financial Market Dialogue and measures to reform financial markets. Infrastructure development and promotion of Sustainable Finance were also discussed with a focus on green finance. It was also decided to establish a bilateral India- UK Sustainable Finance Forum.
The two nations have together taken correct measures to protect the lives and livelihoods of their citizens by providing a plethora of relief and rehabilitation packages, aimed at economic revival and in an effort to integrate it into the global value chain. In order to combat the coronavirus, UK Research and Innovation (UKRI) and India’s Department of Biotechnology will jointly invest up to £8m for research purposes. In addition, the UK Department of Health and Social Care (DHSC) will contribute to India’s Coronavirus Joint Response Plan (JRP) and antimicrobial resistance (AMR) via the World Health Organisation with an initial amount of £ 600,000.
Countries all over the world are working towards reviving their economies. What is essential here is to ensure a sustainable, clean, and resilient revival. To achieve this, it is essential to ensure flow of sustainable finance. The Indian and British governments are working to bring together India’s $1.4 trillion National Infrastructure Pipeline and the City of London, the global home of green finance and long-term institutional capital. In order to provide support to India’s National Infrastructure Pipeline, the two countries will partner on Infrastructure Financing Policy which includes setting up a Project Preparation Support Facility cum Centre of Excellence for PPP projects.
In lieu of the Paris Agreement, India and UK are both committed to achieving their sustainable targets. The UK has legislated to achieve net zero greenhouse gas emissions by 2050, and India has a target of achieving 450GW of new renewable energy capacity by 2030. To facilitate this, it is essential to have both public and private finance options. Both countries have agreed to mobilise private sector inflows towards Green India, thereby fostering a deeper cooperation between UK and India.
India and UK have established a new annual India-UK Financial Markets Dialogue, to share experiences and expertise to enhance collaboration between the two nations. Further, a new UK-India strategic collaboration has been established to facilitate the development of GIFT city (Gujarat International Finance Tech City), India’s first international finance services centre and to promote bilateral relations by bringing together governments, regulators and business to share expertise.
Discussing trade and investment opportunities, the two countries welcome the Enhanced Trade Partnership, which would be a roadmap that could lead to a future FTA. This partnership will seek to address non-tariff barriers to trade and explore routes to removing tariff barriers. Recognising the importance of foreign investment, India and UK will work in tandem to encourage sustainable bilateral investment.
India and the UK have a strategic 400-year old partnership rooted in democracy, equality, and free trade. India sees the UK as a key partner for various sectors including, trade, investments, defence, science, and technology. Bilateral trade between the two nations has expanded and touched £24 billion in 2019. The economies of India and the UK are complementary in nature. While the UK is strong in R&D, India offers scale and affordability, which when used together can lead to winning partnerships and achieve much on a greater scale. India is poised to emerge as the second largest economy in the world by 2050, and the extensive historic and cultural relationships between India and the UK are conducive to an enhanced trading relationship.