India and the United Kingdom (UK) have been going through tough negotiations to hammer out a trade deal but it might not make the Diwali deadline as was anticipated earlier.
According to reports, British Trade Secretary Kemi Badenoch said on Thursday, “We are close… We are still working on a deal,” Adding, “One of the things that has changed is that we are no longer working to the Diwali deadline.”
The remarks come just days after British Home Secretary Suella Braverman had linked the Free Trade Agreement (FTA) to concerns about increased migration of Indians to the UK who are the largest group of visa overstayers.
“Look at migration in this country – the largest group of people who overstay are Indian migrants… I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit,” Braverman had said in The Spectator, a weekly news magazine.
“We even reached an agreement with the Indian government last year to encourage and facilitate better cooperation in this regard. It has not necessarily worked very well,” she added.
The comments did not go down well with New Delhi although there has been some sort of an attempt towards damage control.
When asked about the comments on migration, Ministry of External Affairs (MEA) Spokesperson Arindam Bagchi said, “Wouldn’t want to comment on the statement by UK Home Sec but as far as mobility and consular matters this is a separate issue and there is understanding between both the countries and going forward this will require mutual implementation of these understanding.”
Adding that the “negotiations” have not come to a halt, Bagchi confirmed that the two sides hoped to conclude the agreement by Diwali.
“There are ongoing negotiations on the Free trade agreement, there is interest in both sides to see if we can work towards a deal on FTA that’s beneficial for both the countries at the earliest date, this is a trade negotiation and these matters should be best left to the trade ministers of both the nation’s and they should be dealt by the trade ministers,” he said.
A trade deal between the UK and India is a huge opportunity to deepen our already strong trading relationship worth £24.3bn a year, which will benefit businesses and sectors right across both countries.
A British High Commission Spokesperson in New Delhi added, “We remain clear that we won’t sacrifice quality for speed and will only sign when we have a deal that meets the UK’s interests.”
Interestingly, as part of the round of trade talks, India and the UK signed agreements in the fields of education and nursing on July 21, 2022, to ease short-term mobility for professionals and create employment opportunities.
Amid the controversy over Suella Braverman’s immigration remarks, a British source explained that “business mobility” is not the same as “immigration”.
“Business mobility covers temporary entry for talent to work for a specific time period in a trade partner country. This is a separate issue to that discussed by the Home Secretary,” said the source.
Adding, “Any commitments we seek on temporary entry will aim to encourage the best and brightest talent in India to temporarily work in the UK. Any agreement would be consistent with the points-based immigration system, subject to collective Cabinet agreement.”
What is India-UK FTA?
A Free Trade Agreement between India and the UK is expected to enhance economic growth and prosperity by: increasing import and export flows; increasing investment flows (both outward and inward); enhancing productivity through a more efficient allocation of resources and greater openness to international competition.
On 29 July 2022, both countries concluded the fifth round of FTA talks. Spread over two weeks, both sides were confident in the status of their technical talks, but that seems to be faltering now with delays over the conclusion of the deal.
The UK is keen to gain access to Indian markets for transport equipment, electrical equipment, medical devices, chemicals, motor vehicles and parts, wines, Scotch, spirits and some fruits and vegetables – which could impact local industry players and/or boost the manufacturing ecosystem.
During a visit to a Scotch whisky distillery on Thursday, Kemi Badenoch, UK Trade Secretary and the Cabinet minister in charge of the FTA negotiations at the Department for International Trade (DIT) said the deal being lined up with India would bring great wins for the industry as the steep tariffs of up to 150 per cent are set to be slashed.
India, on its part, wants to increase exports of textiles, food and beverages, pharmaceuticals, tobacco, leather and footwear, and agricultural items like rice – to the UK.
Under the FTA, both sides are also aiming to expand digital cooperation and services.
Trade Irritants:
The two sides are yet to find common ground on many major economic issues. There has been a mini ‘tariff war’ underway between India and the UK even as the two sides have been trying to finalise a deal.
India, on September 28, 2022, proposed retaliatory additional duty of 15 per cent on 22 imported items from the UK, including blended whiskey, Scotch, cheese, etc. as a response to restrictions imposed by the UK on 15 Indian steel products, leading to a slump in Indian exports and loss of duty collection worth the US $247.70 million.
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