Diwali deadline missed but India, UK keen on clinching key trade deal soon

NEW DELHI: With Rishi Sunak taking over as Britain’s first Indian-origin Prime Minister, speculations are high that a free trade deal with India will get the much-needed impetus.
On Wednesday, Britain said that it has completed majority of sections of a free trade agreement with India but will only sign off on the deal once happy — that it is fair and reciprocal.
“We have already closed the majority of chapters and look forward to the next round of talks shortly,” trade department minister Greg Hands told parliament.
“We are working towards the best deal for both sides and won’t sign until we have a deal that is fair, reciprocal and ultimately in the best interests of the British people and the UK economy,” he added.
Diwali deadline missed
The government had previously said it wanted to complete the deal by Diwali, a deadline which passed earlier this week.
India and UK launched negotiations for the free-trade agreement (FTA) in January with an aim to conclude talks by Diwali but the deadline was missed due to a lack of consensus on issues.
Even though most of the issues had been sorted out before Sunak took over as PM, Suella Braverman’s loose remarks on Indians being the largest group of people overstaying in the UK was seen to be a major hurdle.
Following her ouster as home secretary, India and the UK were expected to reaffirm their commitment but then Liz Truss resigned as PM. Now, with Sunak in the saddle, the government expects the negotiations to recommence with some of the ticklish issues around visa flexibility in return for lower import duties on Scotch and automobiles, among others, expected to be taken up.
In his previous role as Chancellor of the Exchequer, Sunak had expressed support for the FTA as he saw enormous opportunities for both countries in the fintech and insurance sectors.
According to the experts, political stability in the UK now would help fast-track the negotiations for the pact, which could potentially double bilateral trade by 2030.
India-UK trade
The total trade between India and the UK stood at $17.5 billion in 2021-22.
Services make up around 70 per cent of annual trade between the two countries.
The UK is also a key investor in India. New Delhi attracted foreign direct investment of $1.64 billion in 2021-22. The figure was about $32 billion between April 2000 and March 2022.
India’s main exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, metal products, machinery and instruments, pharma and marine items.
Major imports include precious and semi-precious stones, ores and metal scraps, engineering goods, professional instruments, non-ferrous metals, chemicals and machinery.
In the services sector, the UK is one of the largest markets in Europe for Indian IT services. The bilateral trade increased to $17.5 billion in 2021-22 compared to $13.2 billion in 2020-21. India’s exports stood at $10.5 billion in 2021-22, while imports were $7 billion.
In a free trade agreement, two countries either eliminate or significantly reduce customs duties on maximum number of goods traded between them, besides easing norms for promoting investments and services trade.
(With inputs from agencies)

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