Signing of India-UK trade pact hits hurdle – FT
India and Britain are unlikely to sign a free-trade agreement (FTA) this month as London is seeking “better terms” in the area of “goods and services,” the Financial Times reported on Wednesday, quoting unnamed officials. The development comes a week after Indian media claimed the deal could possibly be signed in the last week of October.
Sources close to the talks told FT that “a lack of progress in opening up Indian markets to British professional services, including law and accountancy firms,” is one of the reasons for the impasse.
UK prime minister Rishi Sunak was expected to fly to India to attend a cricket World Cup match between India and England in Lucknow, Uttar Pradesh on October 29. However, that is now “very unlikely to happen,” an unnamed British official told FT. Another quoted by the outlet suggested that “discussions are not where we want them to be.”
A senior Indian official told the outlet that New Delhi wants the deal to be “fair, equitable, and have respect for both sides.”
The envisaged trade deal has been in the works since 2021. While India has secured accords with the UAE and Australia, its potential agreement with Canada hit a block after Ottawa accused New Delhi of involvement in the killing of a Sikh separatist leader, which sparked an unprecedented diplomatic row.
Sunak also said, at the G20 Summit in New Delhi last month, that the UK is unlikely to “rush” a deal. According to a UK government official who spoke to FT, the UK premier will not sign a trade deal “on arbitrary deadlines.”
Wednesday’s FT report comes days after Indian newspaper Economic Times reported that the FTA between the two nations could possibly be signed in the last week of October as the two aim to increase bilateral “annual business.” Business Standard, another Indian outlet, has reported that officials on both sides have been working to address “contentious issues” related to a draft of the agreement.
India and the UK have conducted 13 rounds of negotiations and a team led by Indian Commerce Secretary Sunil Barthwal was in London recently to give impetus to the talks. On Friday, Barthwal confirmed to media that the talks have reached “the advanced stage.” “These [talks] are going on, and we are ironing out the differences. We should wait till these negotiations are over,” he said.
The FTA is expected to yield only limited benefits for India, as many of its exports to the UK already enjoy low or zero tariffs, MINT has reported, citing new research by Global Trade Research Initiative (GTRI). Its report claimed that while textiles, apparel, footwear, and agricultural products stand to benefit from tariff reductions, “a substantial growth in Indian exports to the UK will ultimately hinge on product quality improvements rather than [on] the FTA alone” and having a trade deal may not necessarily lead to a substantial increase in India’s labour-intensive goods exports.
According to the UK government, India was the UK’s 12th largest trading partner in the last four quarters, accounting for 2.1% of total UK trade. Bilateral trade between the two countries crossed 36 billion pounds ($43 billion) in the four quarters to the end of Q1 2023, an increase of 34% from the same period of the previous year.
