According to British High Commissioner Alex Ellis, India and the UK are “trying to crack the toughest knots” in the discussions for a free trade agreement. During an interactive session at the FICCI Annual Convention, he made this statement.
In the FTA talks, we are currently attempting to unravel the most challenging knots. It’s not really that simple. We could never do it in three months, in my opinion. He said I don’t know how to do it in three months.
According to Ellis, India will have the largest free trade agreement (FTA) and investment treaty with the UK. If we can pull this off, it will be the largest free trade agreement India has ever signed. He added that there is also an investment pact.
The goal of the FTA negotiations between India and the UK was to wrap up by Diwali this year, however because of political changes in the UK, the deadline was missed.
This week, negotiators from India and the UK went back to the negotiating table in an attempt to reach a consensus on several challenging issues, such as origin rules, market access for cars (including electric vehicles) and trucks, simplified work visa procedures, and the liberalization of financial services. However, some of these issues are still difficult to resolve, according to sources.
This week, negotiators from both nations made every effort to find solutions in difficult regions. Unfazed by the death of two Diwalis in the absence of a deal, the two sides concentrated on accelerating negotiations. There is fear that things could be postponed indefinitely once the focus turns to the Indian general elections in early 2024, according to sources.
The India-UK Free Trade Agreement negotiations were not completed by the Diwali deadline that former UK Prime Minister Boris Johnson set last year. Efforts by the Rishi Sunak-led government to conclude the negotiations by the end of October also failed because of ongoing disputes in a few areas.
There were some narrowing of differences during this week’s 14th round of negotiations in New Delhi. The insider said that in later sessions, this needs to be expanded upon.
Significant variations that have prevented the planned India-UK free trade agreement from moving forward thus far include rules of origin (ROO) clauses that specify the minimal amount of processing that must occur in an FTA partner nation for a good to be eligible for tariff reductions. The UK is not happy with India’s “strict” ROO since many of its businesses—particularly in the automotive industry, which imports a lot of raw materials from the EU—might not be able to benefit from tax breaks. According to the source, India is cautious about ROO because it does not want commodities from third countries to flood its domestic market at the preferential duties agreed upon under the FTA.
In addition to market access for various commodities at zero customs taxes, the Indian industry is asking for increased access for its trained people from industries like IT and healthcare in the UK market.
However, the UK is asking for a large reduction in import taxes on products like cars, lamb, chocolates, scotch whiskey, and other candies.
Additionally, Britain is searching for more chances to offer UK services in Indian markets, particularly in the areas of financial services (banking and insurance), legal services, and telecommunications.
The source further stated that while New Delhi wants to safeguard its generic producers and is leery of any commitment that would lead to patents being extended beyond their regular terms, the UK wants India to agree to steps in the field of intellectual property rights that go beyond the WTO’s TRIPS Agreement.
India has insisted on lenient visa regulations for IT and medical experts as well as a social security agreement that would safeguard the contributions of temporary employees to serve the interests of its workers, but the UK is not “very enthusiastic” about it.
In contrast, India is hesitant to grant greater access to the UK’s financial services sector, which includes banks and insurance, due to the need to safeguard local companies.