British and European Union negotiators finally sealed a Brexit deal on Christmas eve, after 11-month long deliberations and just a week before the UK finally leaves the 27-nation bloc, its biggest trading partner. It is too early to give a complete picture to the 1,246-page deal.
The two sides have been in complex negotiations since March to try to keep their trade in goods flowing from January 1, 2021. The deal announced on Thursday means that this goods trade—roughly half of the $900 billion of annual EU-UK commerce—will remain free of tariffs and quotas.
However, goods moving between the UK and the EU will be subject to customs and other controls, and extra paperwork is expected to cause major disruptions.
The deal has touched almost all sectors—financial and business services, foreign policy, security and defence, mobile roaming, mutual recognition of professional qualifications, access to legal services, digital trade and public procurement, and even fishing quotas between Britain and the EU. However, provisions for transport, energy and civil nuclear cooperation will be below current levels.
Although it is premature to assess the gains for India from the agreement between the European Union (EU) and the UK, Indian goods would not get much benefit from this pact. However, India can explore opportunities in service sectors like IT, architecture, research and development and engineering in both the markets as the EU-UK pact does not cover services, they added.
With the UK being among the largest source of foreign direct investment to India, the Brexit deal will have a significant ripple effect back in India. According to experts, while the Brexit paves way for a free trade agreement (FTA) between New Delhi and London, it might take the sheen away from India's planned FTA with the EU. India had a lot of contentious issues while negotiating FTA with the EU. However, after Brexit, the UK could have a different stand on those issues and now India can pursue FTA talks again with both the regions.
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According to experts, India's services sector is likely to make gains from the curbs on the free movement of professionals between the two markets. According to the Brexit trade and security deal, UK nationals will no longer have unrestricted freedom to work, study, start a business or live in the EU and vice versa, although both sides will have tariff-free and quota-free access to each other’s market.
Sectors such as IT, R&D, architecture and financial services are likely to shine for India.