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Progress Toward UK-India Free Trade Agreement
The United Kingdom and India are making significant strides in their negotiations for a free trade agreement, as recent discussions reveal that approximately 90% of the elements have been settled. This development was shared with businesses during a recent call with UK negotiators.
With India’s economy booming and its population reaching 1.4 billion, there is optimism that the UK government may finalize this much-anticipated deal within the year.
A source from the government informed the Guardian that one of the longstanding points of contention, specifically concerning the mobility of workers—particularly visas for Indian employees—has largely reached a resolution.
“We are nearing completion. We’re closer than ever before, although discussions at the political level can be complex,” the source stated.
During a briefing held by representatives from the UK trade department, businesses were made aware of the substantial progress, although certain remaining issues still need addressing, particularly regarding industries such as whisky, automobiles, and pharmaceuticals.
The anticipated agreement could lead to notable reductions in tariffs for Scotch whisky and car exports to India, providing relief to these sectors of the UK economy, which have been adversely affected by tariffs imposed by the Trump administration in the United States.
This conversation occurred just ahead of pivotal discussions between Rachel Reeves and India’s Finance Minister, Nirmala Sitharaman, concerning a bilateral investment treaty. This treaty is being negotiated concurrently with the free trade agreement and holds significant importance due to its potential benefits for the British financial services sector.
On Tuesday evening, Sitharaman attended a working dinner with Reeves and Labour leader Keir Starmer. The following day, she met with Jonathan Reynolds, the UK’s Trade Secretary, who had previously traveled to New Delhi in February to formally reinitiate discussions.
At an event hosted by the Indian High Commission prior to her meetings, Sitharaman expressed India’s desire to forge more bilateral trade agreements, attributing this need to the increasing global uncertainties.
Following their talks, she conveyed an optimistic outlook, noting a “great sense of positivity and dedication” toward swiftly concluding the UK-India deal. In light of her visit, ministers also announced a £128 million package of new export agreements and investments with India.
Reeves emphasized the necessity of pursuing trade agreements with nations such as India, stating it is “imperative we go further and faster to kickstart economic growth.”
Keshav Murugesh, CEO of the Indian technology firm WNS, which is expanding its presence in London, remarked that enhanced bilateral relations would “fuel innovation and generate high-skilled jobs” in both nations.
Despite the progress, some unresolved issues remain, notably regarding specific agricultural exports and India’s request for exclusion from the UK’s upcoming border tax policy. Reports have indicated that India seeks exemption from the UK’s carbon border adjustment mechanism (CBAM), which targets carbon-intensive goods like steel and fertilizers, asserting that such a tax imposes an unfair burden on developing countries.
However, granting this exemption could spark controversy, as the tax aims to create a level competitive environment for UK steel manufacturers against nations with lower or no carbon levies.
The UK began formal negotiations for a free trade agreement with India in January 2022, viewing it as a key opportunity stemming from Brexit. Prior efforts by successive Conservative administrations to secure a swift agreement had not come to fruition.
Source
www.theguardian.com