The conclusion of the India-UK free trade agreement (FTA) could be pushed beyond the general elections in both countries, despite last-mile dash by top officials from both sides, because differences still remain on issues of market access in key areas of goods and services.
The formal announcement of commencement of the election process in India is expected by middle of March and the new government will be taking office latest by June. In July, it will be presenting the full budget for FY25 and priorities for the next five years.
Speculation is rife in the UK that Prime Minister Rishi Sunak may call for early elections. According to some UK media reports, elections in the UK may be held in May along with some local elections even though the current Parliament term ends in December.
A high-level delegation from the UK is currently in India this week to ensure that there is no let-up in the intensity of negotiations. Their visit follows a visit to London by officials from India led by Commerce Secretary Sunil Barthwal in the last week of February. The engagement between the two sides continues at the highest levels.
While top officials engage, the designated negotiators from both sides are engaged in the 14th round of negotiations since January. This round of negotiations still continues. Along with the FTA both sides are also negotiating a Bilateral Investment Treaty (BIT) which will be signed along with the FTA,
According to a report in UK’s The Guardian newspaper, India now wants to wait for the next government in the UK so that if the Labour party forms the government then it can expect a better deal on visas and social security. Labour traditionally has been more liberal to the issues of migration. India is seeking easier visas for its services professionals as part of service sector negotiations. On social security India wants a mechanism which allows temporary Indian workers in the UK to assess their social security contributions once their work-related stay is over.
According to the newspaper, the shadow business secretary, Jonathan Reynolds, met Commerce and Industry Minister Piyush Goyal during a trip to Delhi last month. “His visit rankled with government figures who are concerned that India may decide to hold out until after the UK general election in the hopes of getting a better deal from Keir Starmer’s government. Labour is projected to win a majority,” the newspaper said.
The trade agreement with the UK will be an important milestone for India. India has signed 13 FTAs so far with individual countries and regional blocs. It all adds up to 21 countries with which India had trade preferential trade terms. None of these are with the ‘Developed West’. Officials admit that the UK FTA is the most complex one they have negotiated so far. For the UK which opted out of the European Union, it is an attempt to realign its ties with the world.
It is a new age FTA that goes beyond simple give and take of tariff cuts in goods and services trade. This FTA has 26 chapters dealing with other subjects like Intellectual Property, Government Procurement, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Competition, Rules of Origin, Trade Facilitation, Customs Cooperation, Small and Medium-Sized Enterprises, Trade and Sustainable Development, Labour, Gender, Digital Trade, Dispute Settlement, General Provisions and Transparency.
The bilateral trade between India and the UK increased to $ 20.36 billion in 2022-23 from $ 17.5 billion in 2021-22. India’s merchandise imports from the UK were $8.96 billion in FY2023 while exports stood at $11.4 billion.