Negotiations for a free trade agreement (FTA) between India and the UK are in a crucial phase, with both sides intensifying efforts to resolve outstanding issues, though the signing of the deal appears unlikely before upcoming elections in both countries.
The progress of the FTA was recently reviewed by the Prime Minister’s Office (PMO) on February 16, with Commerce and Industry Minister Piyush Goyal and Commerce Secretary Sunil Barthwal also participating in the meeting.
A UK government official, speaking on condition of anonymity to The Indian Express, emphasized the need for India to liberalize further, citing its relatively high tariff regime compared to the UK. While negotiations have been ongoing, the official highlighted the importance of ensuring mutual benefits for both economies.
India’s tariff rates, among the highest globally, have been a sticking point, particularly with regards to goods such as cars and whisky. The UK has urged India to lower tariffs on these items, while India seeks improved access for its service sector workforce in the UK.
Contentious issues also include the relaxation of rules for Indian whisky manufacturers and duty concessions in the auto sector, particularly for electric vehicles (EVs).
The FTA with the UK holds significance as it would mark India’s first comprehensive trade deal with a major western partner, potentially paving the way for similar agreements with other western nations. This assumes added importance amidst global supply chain reconfigurations post-COVID-19, with multilateral trade agreements like the Indo-Pacific Economic Framework for Prosperity (IPEF) gaining traction.
While negotiations have advanced through 13 rounds of talks, key issues such as customs duty reductions and professional mobility remain unresolved. Talks also encompass a proposed bilateral investment treaty (BIT).
Originally targeted for signing by Diwali 2022, the India-UK FTA negotiations continue, albeit with challenges that necessitate further deliberation and compromise from both sides.
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