India and the EU-exiting UK hinted that both countries are going to make their economic engagement deeper after the Brexit. The two countries are planning to reach in a Free-Trade Agreement once UK comes out of the European Union.
In a meeting between Finance Minister Arun Jaitely and Britain’s Chancellor Philip Hammond in New Delhi, the two countries decided to set up a fund under National Infrastructure Investment Fund (NIIF) to promote clean energy projects. The fund called Green Growth Equity Fund with a corpus of 240 mn pound will be constituted as a sub- fund within the NIIF.
Both countries discussed effort to add tradability to rupee in the international markets and to promote masala bonds. Masala bonds are issued overseas as rupee denominated instruments to mobilize fund for infrastructure projects. Britain can do a proactive role in this direction as London is one of the most active financial centres in the world.
India is having a number of FTAs with its Eastern neighbors whereas deeper trade pact with the West is missing. An effort to sign FTA with EU is not progressing. UK is one of the top five trading partner for India and the sizable presence of Indian origin citizens is another push factor for engaging in deeper trade ties.
On the other hand, getting a free trade agreement with the 27 nation EU is expected to be difficult. In this context, a trade pact with Britain is a welcome first step to reach the EU.