The India-UK negotiations on a Free Trade Agreement (FTA) are likely to continue for a few more days or even weeks that would push back the actual date of finalising and signing the pact beyond October, according to official sources.
The frenetic activity of the last few weeks had raised hopes of an early conclusion of talks even though officially both sides have always refrained from setting any deadlines after the earlier date of Diwali last year was missed due to political developments in the UK.
Currently the 13th round of talks on FTA is in progress. The current round started on September 3 and with a small break is still continuing. India’s commerce secretary had visited London in the first week of October to push the talks further. All this activity and arrival of a team from UK to India for continuing the round had kindled hopes that a breakthrough could be around the corner.
The Financial Times reported from London on Wednesday quoting British officials “talks are not where we want them to be.”
The Indian commerce secretary Sunil Barthwal had said on Friday, “We are negotiating tough issues which remain.”
The proposed FTA between the two countries, negotiations for which were started in January of 2022 covers 26 chapters or policy areas. “Majority of chapters are closed or are in advanced stages of negotiations,” he had said.
While less contentious issues have been sorted out, protracted negotiations are still on issues of interest to India like greater access for its skilled professionals from sectors like IT, and healthcare in the UK market, besides market access for several goods at nil customs duties.
On the other hand, the UK is seeking a significant cut in import duties on goods such as scotch whiskey, automobiles, lamb meat, chocolates and certain confectionary items.
Britain is also looking for more opportunities for UK services in Indian markets in segments like telecommunications, legal and financial services (banking and insurance).
The London-based FT quoted a person from industry familiar with parts of the agreement as saying that India was offering less access to professional services, including law and accounting, than was found in other modern trade agreements, such as the deal the UK signed with Australia.
The UK has demanded national treatment for its services businesses and greater freedom to its professionals to operate in India during negotiations.
National treatment means treating foreigners and locals equally with regard to rules and regulations. It also means equal access to opportunities for overseas operators and not doing anything that puts them at a disadvantage.
“Some [services] sectors haven’t got anything close to what they might have hoped for, and negotiators have been very clear that they don’t see this deal as a game-changer,” the insider quoted by FT said.
The draft deal did not appear to “break new ground” in areas such as legal services, said another person familiar with parts of the deal. However, the professional services sector had always accepted that it would be difficult for the UK to extract significant concessions in particularly sensitive parts of India’s regulatory system. International law firms have historically been heavily restricted from operating in the country.
Along with the FTA, both sides are also negotiating the Bilateral Investment Treaty. In this treaty the differences over the dispute resolution mechanism in holding up the conclusion of negotiations.