Ahead of G20 Summit, UK PM Sunak wants free trade deal with India but with a rider


Image Source : TWITTER/@RISHISUNAK UK PM Rishi Sunak

Ahead of the much-awaited G20 Summit, UK Prime Minister Rishi Sunak underscored that the free trade agreement (FTA) talks with India are “progressing” and asserted Britain will only agree to a pact that works for the whole of the United Kingdom.

Sunak, while speaking to his ministers about the ongoing trade talks which have completed 12 rounds of negotiations, described India as an “indispensable partner” of the UK across all spheres of bilateral cooperation, which he is keen to strengthen further.

“He said negotiations around a free trade deal were progressing and that he would only agree to an approach which worked for the whole of the UK,” notes a Downing Street readout of the Cabinet meeting.

“The Prime Minister said India was an indispensable partner of the UK, both economically and in addressing the global challenges all democracies are facing. He said we must now strengthen the UK-India relationship,” it said.

India is already one of the UK’s largest trading partners

UK Business and Trade Secretary Kemi Badenoch, who has returned from a visit to India after talks with Commerce and Industry Minister Piyush Goyal last month, also updated the UK Cabinet on the FTA negotiations, saying that “India is already one of the UK’s largest trading partners, with a relationship worth GBP 36 billion a year”.

“The Prime Minister concluded Cabinet by setting out his desire to use our growing relationship in trade, defence, and technology to build a lasting and deep partnership with India which benefits the people of the UK for decades to come,” Downing Street said.

The 43-year-old leader is expected to receive a grand welcome when he arrives in New Delhi, with bilateral talks expected with Prime Minister Narendra Modi during the course of his stay.

While the details of the visit are yet to be confirmed by Downing Street, some UK media reports have indicated that a sightseeing visit to Humayan’s Tomb is expected to be on the agenda for Sunak and wife Akshata Murty.

What is FTA?

It is worth mentioning that a free trade agreement is a deal between two or more countries where they agree on certain obligations that affect trade in goods and services, and protections for investors and intellectual property rights, among other topics. The main goal is to provide a better deal for citizens of the concerned countries involved. 

India and the UK have been negotiating an FTA since January last year, with a goal towards a comprehensive pact that is expected to significantly enhance the bilateral trading relationship worth an estimated GBP 34 billion in 2022. 

Status of the deal

According to the joint statement released by India and the UK, both nations had held the eleventh round of talks in London on July 18. As with previous rounds, this was conducted in a hybrid fashion – a number of Indian officials travelled to London for negotiations and others attended virtually.

Earlier on July 10 and 11, Indian Minister for Commerce and Industry, Piyush Goyal, visited the UK and met with Rt Hon Kemi Badenoch MP, the Secretary of State for Business and Trade, and Nigel Huddleston MP, the Minister of State for International Trade. As per the official release, they discussed ways to make progress on the FTA negotiations and wider trade and investment opportunities for the UK and India.

“Technical discussions were held across 9 policy areas over 42 separate sessions. They included detailed draft treaty text discussions in these policy areas,” it said.

Why have India and the UK not struck the deal yet?

According to reports, the deal has been in a lingering state as the UK wants New Delhi to slash tariffs on British cars, and scotch whisky while India seeks some relaxation in visas for Indian professionals.

Visa issue

Notably, the immigration issue has been a major issue in London amid the fact the country itself struggling to boost its economy and provide the maximum number of jobs to its own population. Besides, the UK’s vote for BREXIT in 2016 also prompted the government to control the migration influx. In fact, this has become a hot topic in the UK elections.

As of now, it is not clear whether the UK would agree on visa relaxation, but the sources claimed it may allow with some terms and conditions. 

Labour laws

During the coronavirus pandemic, the whole world saw the worst economic phase and New Delhi had also sailed on the same boat. However, micro-economic industries had enabled the Indian government to collect taxes even at the helm of collapse. Apprehending the circumstances, New Delhi isn’t in the mood to take the risk again. Therefore, the Modi government has been asking his UK counterpart to frame proper labour and environmental protection laws. 

Import duty on cars

As of now, India imposes a 100 per cent duty on the import of cars from the UK– a slab the former wants to cut down in order to make a level playing field for foreign companies. Although sources claimed New Delhi might slash import duty by at least 25 per cent, it will exclude small-capacity cars. Besides, New Delhi also wants a cap on the number of vehicles sold under the lower tariffs.

Import duty on scotch whisky

India has a handsome whisky market but it imposes 150 per cent import duty on liquor, with an aim to protect its domestic market. But, the sources claimed New Delhi may slash the import duty up to 50 per cent. If the negotiations go as planned, it will be a groundbreaking step for the Indian liquor market.

(With inputs from agency)

Also Read: UK PM Rishi Sunak faces conflict of interest row over Free Agreement Trade deal with India: Report

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