India-UK FTA likely to be signed this Diwali during Rishi Sunak’s possible visit

India and the UK have been negotiating a comprehensive bilateral pact since January 2022, which is expected to significantly increase trade between the two nations

India and the United Kingdom (UK) are likely to sign a Foreign Trade Agreement (FTA) by the end of October as both parties aim to iron out differences on key issues, including rules of origin and visas for Indian professionals. The bilateral pact, which missed an earlier deadline of Diwali 2022, is likely to be signed during British Prime Minister Rishi Sunak’s possible visit to New Delhi in the last week of this month, according to government officials who spoke on the condition of anonymity.

According to one of the officials, while there has been steady progress on issues pertaining to rules of origin, the matter of mobility of Indian professionals to the UK is currently being negotiated. "They are looking at their interests and we are looking at ours," this person added.

The contentious issue

India has been pushing for short-term visas for skilled professionals to cater to those who go to the UK for a limited duration to work on specific projections, the official said, adding that such workers will not need permits to stay long term. On the other hand, the UK has been reluctant to increase the current quota of nearly one lakh annual work visas granted to Indian nationals.

“A 30-member delegation from the UK along with a team of India is currently involved in negotiations to close remaining issues so that the two countries conclude the talks soon. While consensus has already been achieved on 24 chapters, work is on to conclude the remaining two," the second official said.

Throughout the FTA talks, areas of contention for the Indian side have been the rules of origin for goods, intellectual property rights and facilitation of professional mobility.

“UK FTA is the most complex FTA India will sign. This is also the most comprehensive FTA India will have with a developed country. It will pave the way for other such agreements," Commerce Secretary Sunil Barthwal said during the release of trade data on July 14.

India and the UK have been negotiating a comprehensive bilateral pact since January last 2022, which is expected to significantly increase trade between the two nations. The initial deadline for completion of the negotiations was October 24, 2022.

"With both countries going into general elections next year (2024), they are keen on closing the deal before the end of this year," the first official said.

Also Read: India-UK FTA talks may conclude as early as September

The trade opportunity

The UK is one of India's important trade destinations with merchandise exports to the country totalling $10 billion during the April 2022 to February 2023 period, accounting for 2.5 percent of India's total exports. Merchandise imports to India from the UK stood at $8 billion during this period, with a share of 1.3 percent of all imports, data from the Ministry of Commerce and Industry showed. The UK was India’s 15th top trade partner during this period.

Through the agreement, India expects an increase in exports of pharmaceuticals, textiles, food and beverages, tobacco, leather and footwear, and agricultural items such as rice to the UK. Britain hopes to get better access to Indian markets for its chemicals, motor vehicles, electrical equipment, medical devices and spirits.