UK negotiators in Delhi for talks on FTA today

Last week FE had reported the FTA would be signed by the end of this month as most of the issues have been, or are close to being, resolved.
Trade negotiators from the UK are in India and on Monday both sides will sit together to sew up any remaining loose ends in the Free Trade Agreement (FTA) the two countries aim to sign, a senior official said.

The UK team’s visit follows commerce secretary Sunil Barthwal’s visit to London last week to push the negotiations further. Both sides have so far concluded 13 rounds of talks. The official said another team from the UK is already in India for further talks on the Bilateral Investment Treaty (BIT), to be inked along with the FTA.

“Everything is at the closure level,” the official added.

Last week FE had reported the FTA would be signed by the end of this month as most of the issues have been, or are close to being, resolved.

The investment treaty is being negotiated as a separate agreement. Investment treaties help promote and protect investments in both countries. They sometimes give partner countries greater freedom than other international investors.

The main point of contention in negotiations is about the mechanism for the settlement of disputes. India has proposed to first utilise all local judicial remedies before initiating international arbitration. It also wants any international arbitration that happens to happen in India. In December, India passed a law for enabling development of the country as an international arbitration centre.

Apart from BIT, the rules of origin and intellectual property rights (the latter two under the FTA) were some of the issues that were proving to be contentious in the negotiations. From the Indian side, the demand for easier visas for professionals was seeing some resistance from the UK. Differences in services have been sorted out on the lines of the UK’s FTA with Australia which came into force in May.

FTA talks between India and the UK started in early 2021.

In the services sector, the UK has demanded national treatment for its services businesses and greater freedom for its professionals to operate in India. This has been agreed to. National treatment means treating foreigners and locals equally with regard to rules and regulations. It also means equal access to opportunities for overseas operators.

The UK was interested in financial, business and professional, and transport services. It also wanted a liberalised visa regime for its business travellers. “In services, professionals moving from India to the UK or the other way round are most likely to be Indian nationals or of Indian origin, so the issues have been sorted out,” the source said.

Among the other issues, the duties on whisky and automobiles were the two most sensitive issues for India.

In the auto sector, the reduction of tariffs on imports from the UK would be calibrated in a way that its impact on local manufacturing is minimal. In the spirits trade, both countries have narrowed their positions on immediate duty cuts and speed of cuts in coming years .

In wines and other spirits, India may reduce import duty from 150% to 100%, and then to 50% over a 10-year period. The UK had demanded a reduction of duty to 75% straight away and then bringing it down to 30% in the next three years.

The import of Scotch whisky has grown to 7.5 million cases in 2022 from 5.5 million cases in 2021 driven by Mumbai. Total bottled liquor imports in 2022 were 8 million cases.

India’s merchandise exports to the UK increased 9.03% on year in FY23 to touch $11.4 billion while imports rose 27% to $8.9 billion. FDI from the UK stood at $1.7 billion in FY23 as against $1.6 billion in the previous year.

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