The negotiations for a proposed free trade agreement (FTA) with the UK will be over by the end of August and it will be ready to be signed before the Diwali deadline set by the two sides, commerce secretary BVR Subrahmanyam said on Thursday.
The secretary ruled out any delay in hammering out the crucial trade deal due to political uncertainties in the UK after Boris Johnson stepped down as the leader of the Conservative Party, paving the way for another Prime Minister.
Former British chancellor of exchequer Rishi Sunak and foreign secretary Liz Truss are front-runners for the top post.
“We have been assured by the UK side that, irrespective of whoever is in power, there is across-the-board support for the FTA with India,” Subrahmanyam told a group of journalists. Once the negotiations are over in August, both the parties will get into the process of legal scrubbing and other internal clearances (like Cabinet approval). These are expected to be over before Diwali (October 24) so that leaders of both the nations will be able to sign it, the secretary explained. The UK is expected to have a new Prime Minister in September.
Both the countries are engaged in the fifth round of negotiations for the FTA and have so far completed 17 of the 26 chapters that will be covered by it. Given that this is going to be a modern-day FTA, it will go beyond the traditional pillars like goods, services and investments; it will also cover a range of areas, including gender, trade and development, labour, corruption and MSMEs, the secretary said.
Both India and the UK launched formal negotiations in January for the FTA, which could ultimately cover more than 90% of tariff lines. They aim to double bilateral trade of both goods and services to about $100 billion by 2030. The India-UK trade is dominated by services, which make up about 70% of the overall annual commerce.
Earlier in the day, India and the UK signed two memorandums of understanding on mutual recognition of educational qualifications, including maritime education (but excluding professional degrees like engineering, medical, etc), and a framework agreement on healthcare workforce. The agreement on healthcare will allow Indian nurses to work more easily in the UK.
Similarly, both the countries have decided to set up committees to discuss a totalisation agreement being pushed for by New Delhi, and the opening up of Indian legal services for the UK. The MoUs and the panels are in addition to the commitments to be granted by each other under the FTA.
A totalisation agreement will help Indian IT companies that are paying a huge sum to comply with the social security norms for their Indian employees in the UK. A totalisation pact removes dual social security taxation.
As per the MoU on education, on a reciprocal basis, Indian senior secondary school and pre-university certificates will be considered suitable for entry into higher education institutions in the UK. Similarly, the bachelor degree, master’s degree and doctoral degree of India and the UK will also be recognised by each other.
Interim deal to be ratified by Australia by September
The secretary said an interim trade deal, signed with Canberra in April, will be ratified by the Australian Parliament by September, paving the way for its implementation. Elections in Australia had delayed the process of ratification.
Australia will also amend its domestic regulations pertaining to the Double Taxation Avoidance Agreement (DTAA). This will enable Canberra to stop taxing the offshore income of Indian firms providing technical support there.
Both the India Australia Economic Co-operation and Trade Agreement and the amendment will come into force simultaneously, Subrahmanyam said.