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UK-India Free Trade Agreement
At FTA’s heart, the promise of Global Capacity Centres
Context: As the UK-India inch closer to signing a historic Free Trade Agreement (FTA), there is increasing recognition of its potential to reshape bilateral economic ties.
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- Among the most promising avenues of collaboration is the rapidly growing sector of Global Capability Centres (GCCs) — where India leads globally, and the U.K. can emerge as a strategic partner.
Why Are GCCs a Strategic Asset for India and the UK?
- India is currently home to over 1,500 GCCs, employing more than 1.9 million professionals and playing a vital role in global innovation, digital transformation, cybersecurity, and R&D.
- British companies are no longer viewing India merely as a back-office location.
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- Instead, they see a strategic partnership opportunity, especially for advanced tech solutions and digital services.
What Role Can the FTA Play in Advancing the GCC Sector?
- The proposed UK-India FTA can act as a catalyst by:
- Removing regulatory bottlenecks
- Facilitating professional mobility
- Aligning data and digital governance standards
- These steps can enable smoother expansion of UK-linked GCCs in India, helping British firms harness Indian talent to serve global markets.
- The agreement can also integrate British expertise into India’s innovation ecosystem, unlocking mutual growth.
How Are the UK and India Strengthening Bilateral Trade Ties?
- Following the 2024 G-20 Summit in Brazil, where Prime Ministers Keir Starmer and Narendra Modi pledged deeper cooperation, diplomatic momentum has accelerated.
- Foreign Secretary David Lammy and Business Secretary Jonathan Reynolds have both visited India, underlining the U.K.’s commitment to finalising the FTA and broadening economic ties.
- For the U.K., the FTA offers access to one of the world’s fastest-growing digital economies, while India stands to benefit from greater British investment, especially in high-value services and skilling initiatives.
How Do GCCs Bridge Trade in Services, Skills, and Technology?
- The UK India Business Council (UKIBC) has long argued that the future of trade lies not just in goods but in services, skills, and technology — all of which converge in the GCC sector.
- A well-structured FTA can create IPR-friendly frameworks, enable cross-border collaboration and tackle issues like double taxation, data localisation, and regulatory misalignment.
- These reforms can significantly enhance the scale and quality of GCC operations in India.
What Policy Support Exists for GCCs in India?
- Although India lacks a dedicated national GCC policy, the ecosystem is thriving.
- The Ministry of Electronics and IT (MeitY) is working with NASSCOM, Zinnov, KPMG, and Invest India to shape a national framework as outlined in Budget 2025.
- This initiative aims to guide State-level policy formulation, improve talent pipelines, infrastructure, and legal facilitation and promote innovation-driven growth.
How Are Indian States Promoting GCC Development?
- States like Uttar Pradesh have stepped up, hosting landmark events like the “GCC Conclave” in cities beyond Delhi NCR — including Lucknow, Kanpur, Varanasi, and Prayagraj.
- With participation from Microsoft, TCS, HCL, and Standard Chartered, the State has signalled its readiness to become a GCC hub.
- These regional efforts complement national ambitions and demonstrate India’s bottom-up approach to driving GCC-led growth.
What Are the Key Insights from UKIBC’s GCC Consultation?
- In a closed-door consultation, the UKIBC brought together industry leaders and experts to discuss the evolving role of GCCs in India’s economic growth.
- Key takeaways included:
- The debate over the need for a national vs. organic policy
- Risks of inter-State competition due to varying GCC policies
- Importance of diversity in talent and GCC formats
- Legal and operational hurdles shared by Indian and U.K. companies
- FTA’s role in supporting professional mobility and climbing the global value chain
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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH
