The visit is crucial as dates for the general elections are expected to be announced in less than a month, triggering the Model Code of Conduct (MCC) which will restrict the Union government’s ability to announce the deal.
An Indian delegation headed by Commerce Secretary Sunil Barthwal left for London Tuesday in a final effort to seal the India-UK free trade agreement (FTA) before the dates for the 2024 general elections are announced.
This comes four days after the Prime Minister’s Office (PMO) reviewed the progress of the India-UK FTA talks being negotiated for the last two years.
The visit is crucial as dates for the general elections are expected to be announced in less than a month, triggering the Model Code of Conduct (MCC) which will restrict the Union government’s ability to announce the deal.
Efforts to close the deal this month also assumes significance because the UK is also headed to elections by the end of the year. Hectic parleys have been going on — a UK delegation visited India in January.
“The signing of the India-UK FTA is still possible and the Commerce Secretary and other negotiators are headed for the UK. If substantial conclusion of the FTA is done, it can be announced and there are unlikely to be any amendments as the NDA government is expected to come back to power again,” a government official said.
Earlier, The Indian Express, quoting a UK official, had reported that the deal can be signed in the next three weeks and that India needs to open up more as it is a high tariff country and the UK already is very open.
The India-UK FTA will uld be the first full fledged FTA with a developed country which could accrue significant benefits in the service sector and several labour intensive sectors such as textile and leather industry.It is crucial for New Delhi to sign the free trade agreement as it has passed on regional trade agreements such as the China led-Regional Comprehensive Economic Partnership (RCEP) and has also not decided to join the US led-Indo-Pacific Economic Framework for Prosperity (IPEF’s) trade pillar.
Meanwhile, Indian competitors such as Vietnam and other South Asian countries are inserting themselves in the global supply chain with multiple FTAs and regional trade deals. Post-pandemic Vietnam has been able to attract more investments that are moving away from China.
The political atmosphere in the UK remains heated with an increasing anti-immigrants stance. India has, however, sought access for its service sector workforce under the FTA. The UK’s economy dipped into a recession amid high interest rates and spending cutbacks.
India’s tariff regime has been a concern for trade partners as India has one of the highest import tax rates in the world. While the average tariff on goods imported from India into the UK is 4.2 per cent, the average tariff in India on goods imported from the UK is 14.6 per cent.
While the UK has asked India to reduce the duty on cars and whisky among other items, India has sought better access for its service sector workforce in the UK. Negotiations on cars and whisky have been contentious as the Indian industry has been seeking greater access into the UK market.
Indian whisky manufacturers have said the UK should ease its three year maturation rule, which acts as a barrier, and New Delhi is also seeking duty concessions in the auto sector, particularly in the EV segment.
