The negotiations on India-UK Free Trade Agreement are expected to be completed before the end of the year and right now both sides are working on reaching a common ground on issues of intellectual property rights, rules or origin and investment treaty, a senior official said Friday.
“We are very close to completing the negotiations and the final agreement on all the issues is possible before the end of the year,” the official who did not wish to be named told reporters.
On the other contentious issue of automobile tariffs and wines and spirits also both sides have come to a broad consensus. “However, nothing is agreed till everything is agreed.”
On automobiles, the UK wants India to cut duties on imports for its manufacturers from the highs of 100% and on spirits from 150%. India is also seeking a change of rules regarding classification of products under the category so that its wines and spirit industry gets access to the UK market.
The Indian industry is demanding greater access for its skilled professionals in the UK market while the UK is also looking for more opportunities for UK services into the Indian markets. The UK has demanded national treatment for its services businesses and greater freedom to its professionals to operate in India. National treatment means being subject to same rules as the the local companies.
On rules of origin both countries are negotiating how much the value addition on each product should be done in each country to qualify for concessional tariffs under the FTA. This is to prevent third countries from using the FTA route to dump its product in either country. Usually in its FTAs with other countries India has agreed to a single number but the UK wants different value addition norms for different products.
The negotiations on the investment treaty which will be concluded along with the FTA is being driven by the Department of Economic Affairs. India relies on its model Bilateral Investment Treaty as a guide in such negotiations. The issue being discussed with the UK is which courts will have the jurisdiction if a dispute on investment matters arises.
The negotiations on FTA were launched in January 2021 is one of the most complex ones being negotiated by India and is the most comprehensive one India has attempted with a developed country.
The negotiations are spread over 26 chapters or policy areas. Of the 26 chapters, 19 have been closed for negotiations, the official said.
The 11th round of talks on the FTA were concluded recently in London. Both Commerce and Industry Minister Piyush Goyal and Commerce Secretary Sunil Barthwal visited London during the course of the negotiations to give the talks a push.
India’s merchandise exports to the UK increased 9.03% on year in 2022-23 to touch $ 11.4 billion while imports rose 27% to $8.9 billion. FDI from the UK stood at $1.7 billion in FY23 as against $1.6 billion in the previous year. India’s main exports to the UK are ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment, spices, machinery and instruments, pharmaceuticals and marine products.
The main imports from the UK include precious and semi-precious stones, ores and metal scraps, engineering goods, professional instruments other than electronics, chemicals and machinery.