Both sides agreed to continue talks on India-UK FTA
The Indian corporate bond market and the UK-India financial services relationship were discussed at the inaugural meeting between the the United Kingdom and Indian officials as part of the India-UK Financial Markets Dialogue (the Dialogue) on 9 July 2021.
The City of London Corporation’s Capital Markets Working Group made their presentation on the corporate bond market and the India-UK Financial Partnership presented their recommendations on the bilateral financial services during the virtual meeting.
Despite various efforts, the size and breadth of issuers, liquidity in the corporate bond markets in India remains smaller than other countries as a percentage of GDP and this prevents it from meeting the needs of firms and investors, according to a recent working paper by the City of London Corporation.
The Working Paper has considered the issues that prevent the market from achieving scale, including those faced by market participants, such as issuers, insurance companies, pension funds, mutual funds and foreign investors, from accessing debt capital domestically and internationally.
The paper compared the market practices and regulatory approaches between India and other markets, including London, a leading international jurisdiction for global issuers and Indian corporates to access international debt capital and discussed learnings and innovations which will enable the growth of a robust and resilient debt capital markets ecosystem in India.
The recommendations made include those for (i) improving the efficiency and availability of the primary markets, (ii) deepening liquidity in the secondary markets, (iii) developing the ecosystem of products and, (iv) targeted tax, regulatory and reporting interventions to help address issues faced by issuers and investors in accessing domestic and international debt capital markets.
Following the inaugural India-UK Financial Markets Dialogue (the Dialogue), both sides also agreed to continue to engage in the coming months in the run up to the next Economic and Financial Dialogue (EFD) and the beginning of negotiations for a future India-UK Free Trade Agreement (FTA). Both of these are expected to take place later this year.
Also discussed at the meeting was progress on the UK-India GIFT City Strategic Partnership. Both sides agreed on areas for further collaboration, including sustainable finance and FinTech, with the aim of supporting increased UK industry presence in the centre.
Participants provided updates on their respective banking and payments landscapes, with a view to increase cross-border activity in this area. The Bank of England discussed its work on cyber resilience. Both sides also recognised the key role the banking sector has played in maintaining stability during the Covid-19 pandemic.
Participants discussed matters relating to the insurance sector, including domestic updates on the impact of Covid-19, opportunities to encourage increased UK investment in the Indian market and the UK Solvency II Call for Evidence.
Participants also took stock of capital markets cooperation. The UK outlined progress on regulatory reforms, including through the Wholesale Markets Review and the Lord Hill Listings Review. There was also a productive discussion on opportunities for increased cross-border activity, including an update from India on implementation of the direct listings policy, said a joint statement issued after the Dialogue.
Participants then welcomed leaders of the India-UK Financial Partnership (IUKFP), noting the significant progress achieved since the last EFD in contributing to policy development, particularly the Partnership’s efforts towards promoting greater links between GIFT City and the UK financial services ecosystem.
Both sides look forward to formally collaborating with the Partnership’s FinTech workstream at the next UK-India FinTech Joint Working Group meeting and to the launch of policy papers on GIFT City, FinTech and cross-border trade and investment at the next EFD and beyond.
The Dialogue was established at the 10th Economic and Financial Dialogue (EFD) in October 2020 to deepen bilateral ties in the financial sector. Financial Cooperation is one of the key pillars of the 2030 Roadmap adopted by the two countries during the recent meeting of the two Prime Ministers. The India-UK Financial Market Dialogue is one of the key elements of this Financial Cooperation.
As two services driven economies, both sides agreed there is significant scope for strengthened financial services cooperation between India and the UK, the joint statement said.
The Dialogue was led by senior officials from the Indian Ministry of Finance and HM Treasury, with participation from Indian and UK independent regulatory agencies, including the Reserve Bank of India, the Securities and Exchange Board of India, International Financial Services Centre Authority, Insurance Regulatory and Development Authority of India, the Bank of England and the Financial Conduct Authority. #investment #financial #banking #services #exports /fiinews.com
