India-UK trade talks on track, government looks at August 31 deadline

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Stressing that trade talks between India and the United Kingdom are on track, Commerce Secretary BVR Subrahmanyam has said that negotiations on the proposed trade deal currently being negotiated by the nations would be concluded by August 31.

“Irrespective of the party in power in the UK, the logic of FTA with India is irreversible,” Subrahmanyam told the press on July 21.

The UK is currently in the middle of a political crisis with Prime Minister Boris Johnson waiting to leave office after resigning earlier this month, and his colleagues in the ruling Conservative Party engaged in a bitter competition to become the next prime minister. Moneycontrol had been the first to report that Indian trade negotiators believed that Boris Johnson's exit may prolong India-UK trade talks but won't complicate it.

As of July 21, former British Chancellor of the Exchequer (Finance Minister) Rishi Sunak and Foreign Secretary Liz Truss are chosen to be the party's nominees for internal party polls the results of which will be announced on September 6.

The government had worked overtime to stick to the Diwali deadline for a draft FTA with the UK, officials said. The tight timeline of talks had been agreed on during Johnson's talks with Prime Minister Narendra Modi during the former's visit to India in April.

Following the launch of ETP, both sides also launched negotiations for a Free Trade Agreement on January 13, 2022. Five rounds of negotiations have been held till now.

India’s bilateral merchandise trade with the UK was worth $17.4 billion in 2021-22. This was higher than the previous record of $16.8 billion in 2018-19. Indian exports were $10.4 billion, up from the previous highest of $9.6 billion in 2017-18. Imports jumped to $7 billion, but remain lower than the $7.5 billion hit in 2018-19.

Ticking issues

As is often the case, one of the main sticking points in the pact continues to be India's hesitation in opening up its market to foreign products and the equally aggressive push by foreign sellers in entering large segments of India's growing market that remain underexplored. In the case of this pact, this has been true for London's insistence on allowing high-value British goods such as scotch whiskey and automobiles into India at zero or low tariffs.

However, officials say the issue has now almost been resolved, as India has offered the UK lower duties on alcohol. The recent FTA India signed with Australia reduced the tariff on imported wine with a minimum import price of $5 per 750 ml bottle from 150 percent to 100 percent. Going forward, tariffs are set to be brought down to 50 percent over 10 years.

MoUs signed

On July 21, India also signed two MoUs and a framework agreement with the UK on mutual recognition of educational qualifications including maritime education, and a Framework Agreement on the health care workforce.  The MoU on education is expected to facilitate closer alignment on education between India and the UK, enhance short-term bilateral mobility and ensure mutual recognition of qualifications.

On a reciprocal basis, Indian Senior Secondary School/Pre-University Certificates will be considered suitable for entry into UK higher education institutions. Similarly, the Bachelor degree, Master’s degree and Doctoral degree of India and the UK will also be considered equivalent to each other. Apart from encouraging student mobility, the mutual recognition of qualifications would also promote excellence in higher education through cooperation, and academic and research exchanges.

Meanwhile, the MoU on maritime education qualification will pave the way for the two governments to mutually recognise the certificates of maritime education and training, competency and endorsements of seafarers issued by each other.

"The MoU will prove beneficial for employment of seafarers of both the countries and would make them eligible for employment on ships of either party. India being a seafarer-supplying nation with a large pool of trained seafarers, it is expected to be significantly benefitted from the MoU," a readout from the Commerce Department said.

The agreements are part of the commitments made by both parties under the Enhanced Trade Partnership (ETP) launched by the prime ministers of both countries on May 4, 2021 to unleash the trade potential of the partnership by doubling trade by 2030 and reducing market barriers to trade in key sectors.