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India and UK discuss stalled free trade agreement

Negotiations have been deadlocked since 2001 as London seeks “more favorable” conditions from New Delhi

Indian Prime Minister Narendra Modi and his UK counterpart Rishi Sunak discussed plans on Tuesday for a Free Trade Agreement (FTA) between the two countries. Reports have suggested talks on the long-awaited pact are deadlocked as the two sides have so far failed to reach a compromise.

Taking to X (formerly Twitter), Modi posted that he and Sunak had a “good conversation” where they agreed to work on reaching a “mutually beneficial” trade agreement. Sunak’s office meanwhile emphasized that the deal should benefit both countries. “[Prime Minister Sunak] reiterated the importance of reaching an ambitious outcome on goods and services,” the statement read.

The deal has been in the works since 2001, but has stalled as London seeks “more favorable” conditions such as tariff reductions on goods being shipped to India, unnamed UK government officials told The Hindu BusinessLine newspaper last month.

However, Indian companies are refusing to offer import-duty concessions without London offering easier temporary movement of Indian professionals to the UK for business. While Indian goods exported to the UK enjoy none-to-very-low tariffs, the average tariffs on British exports to India are much higher at around 14%.

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India's Prime Minister Narendra Modi (L) meets with Britain's Prime Minister Rishi Sunak during the G7 Leaders' Summit in Japan on May 21, 2023.
UK seeking ‘more favorable’ terms to sign trade pact with India

The UK is asking for a reduction for high-tariff goods such as automobiles (100%) and whiskey (150%) as well as liberalization of financial and legal services and strict Intellectual Property Rights (IPR) rules to give additional protection to pharmaceutical majors.

The discussion between Modi and Sunak comes days after New Delhi signed a Trade and Economic Participation Agreement (TEPA) with Iceland, Liechtenstein, Norway, and Switzerland – the four nations that comprise the European Free Trade Association (EFTA). While the South Asian country has committed to reducing import tariffs on goods from the bloc, the EFTA has promised to invest $100 billion in India over 15 years.

India’s negotiations with Canada halted last year due to a diplomatic row between the two countries. However, several nations have expressed interest in signing trade agreements with India this year as its economy has seen significant growth (8.4% from October to December 2023).

March 13, 2024 at 08:43PM
RT

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