The Federation of Indian Chambers of Commerce and Industry (FICCI) has called for restarting of negotiations for India’s Free Trade Agreements (FTA) with the UK and the European Union (EU), citing the growing importance of the Indian economy to the world.

“India today is a very strong and important economy that other countries want to associate with,” said FICCI Secretary General A Didar Singh, calling for the restart of the India-EU FTA which has been on the anvil for 10 years.

“Therefore, we feel India-EU FTA has a much better chance being operative and coming on for a common cause now because businesses need that,” he said, after addressing the South Asian Diaspora Convention here on July 19.

Singh also called for an urgent initiation of India-UK FTA, saying it would help clear the current uncertainty among businesses created by the UK’s decision to leave EU, or Brexit.

He said the call came from a FICCI survey of the 800 Indian companies based in the UK, which reported a sudden 15% decline in return on investments as the pound sterling fell 15% following Brexit vote last month.

Responding to the survey, the companies said they see a decline in profitability over the next three to five years, especially following the split decision which will impact their European business done through UK-based offices.

The companies, responding to the survey, said they were facing problems in getting new contracts and businesses, according to Singh.

Over 50% of the 800 Indian companies surveyed had presence in the EU through UK offices.

“All these businesses will have to re-calibrate their strategies,” Singh said of the Brexit impact and uncertainty faced by business over the next two years.

There are concerns about managing businesses in the post-Brexit environment and some companies would like to set up another office in the EU, which would add more costs and make them less competitive.

Singh also hoped that the India-UK FTA would help relax student visa conditions allowing internships and employment for Indians studying there.

There has been an estimated 20% drop in Indian students going to the UK for studies over the last two and a half years when the internship and employment condition was removed.

Source: Business Standard