India and the United Kingdom could finalise the much-awaited deal on trade, dubbed as a free trade agreement (FTA) later this month. The most touted deal that had started in the era of the former UK Prime Minister Boris Johnson would minimise the burden of people in both countries.
Although there was no official confirmation about whether the deal would be signed by this month, the New Indian Express quoting sources claimed officials of both nations are "hopeful" to pinnacle of the negotiations.
The major development came as the top officials of both India and the UK held the twelfth round of negotiations in the national capital on Wednesday. However, the sources claimed the final outcome could be possible between August 21 and 25 as the delegation is prepared to meet at the G20 Summit.
"If all goes well, the much-awaited FTA will be ready within a month," according to the source of TNE.
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 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 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.
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