Paper: GS – III, Subject: Economy, Topic: Trade and External Sector, Issue: India-U.K. FTA and the impact on global capacity centres.
Context:
The UK and India are moving closer to signing a historic Free Trade Agreement (FTA) which redefines bilateral economic engagement.
Key Highlights:
Global Capability Centres (GCCs):
- GCCs are a fast-growing ecosystem where India leads globally. UK can be a pivotal partner in this domain.
- UK businesses increasingly view India not just as a cost-saving back office but a strategic partner. GCCs sit at the intersection of trade in goods, services, and technology.
India’s Strength in GCCs:
- India has over 1,500 GCCs employing more than 1.9 million people.
- India contributes significantly to global innovation, digital transformation, analytics, cybersecurity, and R&D.
Role of the FTA:
- FTA can ease regulatory barriers, facilitate movement of professionals and harmonize digital and data governance standards.
- It enables British companies to expand GCCs in India and use India as a global services hub.
- Global Value Chain Integration: FTA can help Indian GCCs climb the value chain by focussing on skilled manpower, digital innovation, and services.
India-UK Cooperation in GCCs:
- India’s pro-investment environment supports GCC growth even without a formal national GCC policy.
- MeitY, NASSCOM, and Invest India are actively involved.
Challenges include: Taxation (corporate and indirect taxes), Litigation, IP rights and data handling. White paper by Deloitte highlights India’s competitiveness in attracting GCCs.
Measures:
Conclusion:
GCCs are central to digital trade and economic diplomacy. In this context, UK-India FTA can act as a catalyst for mutual economic growth through GCC collaboration by building a knowledge corridor between the two nations.
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