Cloudy prospects | The Financial Express

Cloudy prospects

FTA negotiations with UK are bound to be tough for a mutually satisfactory agreement

FTA, Free trade agreement, India UK FTA, India, UK, United Kingdom, trade pact, trade deal
While the FTA negotiations will take their own course, both partners can still follow the roadmap 2030 on trade

A free trade agreement between India and the UK—talks over which have been ongoing since early last year—is no doubt a top priority at the highest political levels of both nations. While India wants an agreement that is “balanced and comprehensive”, UK’s Prime Minister Rishi Sunak has indicated that he would not “sacrifice quality for speed” in securing the deal. Setting deadlines like Diwali were perhaps unrealistic as trade deals are not simple affairs, entailing a complicated process of give and take for greater access to each other’s markets. If India seeks greater market access, it must also allow the UK to sell more of its goods and services. But the remarks of UK’s secretary of state for trade, Kemi Badenoch, who was in Delhi last month to begin the sixth round of FTA negotiations, is unlikely to appeal to India as she stated this is not a deal that entails free movement visa offers for Indians. In an interview to the UK Times, she stated that while concessions on business mobility are possible, Indians will not receive the same kind of deal as Australia—with which UK signed an FTA last year—permitting under-35s to live and work in the UK for three years. Allowing freer movement of its professionals is a critical area of interest for India. An important reason why it remains ambivalent about the benefits of its FTAs such as with the Association of Southeast Asian Nations, for instance, was that it did not entail greater cross-border movement of its professionals like teachers, nurses, architects,software techies, chartered accountants, and doctors.

Also Read: UK reaffirms 2030 roadmap commitments at high level dialogue with India

The UK is keen on an FTA with India as part of its wider outreach to the Indo-Pacific region. With the template of the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership in mind, it seeks a more ambitious deal. Whether India shares the same level of ambition is a different matter. According to the Financial Times, UK has been frustrated over several sticking points in earlier rounds of FTA discussions such as allowing its firms to bid for public contracts and securing greater market access in financial services.

Also Read: Expect to sign at least 2 more FTAs in 2023, says Piyush Goyal

The UK also eyes a “huge opportunity” in exports of whisky, salmon, and cheese but had concerns after India initially offered to liberalise tariffs on only half as many agricultural products. Badenoch’s caution on what is on offer for India also reflects a backlash regarding the FTA signed with Australia with some Conservative MPs and the then agriculture secretary writing to former PM Boris Johnson warning that the government had made too many concessions to Australia. India-UK FTA negotiations therefore are bound to be tough with an additional complication that national elections are due in both nations in 2024.This would indeed make talks “difficult” if a deal is not finalised before then, as UK’s Trade Secretary rightly noted. The big challenge for both nations is to revive the economic component of the bilateral relationship that is somewhat underwhelming considering the long historical association. While the FTA negotiations will take their own course, both partners can still follow the roadmap 2030 on trade—that is currently pegged at £29.6 billion annually—and step up investments in each other’s economies, besides boosting cooperation in defence and security, health, climate change and people-to-people contacts to bolster a comprehensive India-UK strategic partnership.

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First published on: 26-01-2023 at 04:45 IST