India and the UK are unlikely to meet a Diwali deadline for concluding a free trade agreement (FTA) due to persisting differences in migration, automobiles and liquor tariffs, and the deal may be pushed back to November, people familiar with the matter said on Friday.
There is, however, the possibility that the two countries could agree to a truncated deal in the first stage, and a comprehensive agreement at a later date, the people familiar with negotiations on both sides said. The people said that several tricky issues remained to be sorted out in the short period of time before Diwali, which is expected to be celebrated on October 24.
The deal could thus be pushed back to the second week of November though hectic consultations are still on by both sides, the people said.
Though both sides understand that trade deals are about give and take, India cannot allow unfettered access to British automobiles and liquor, including Scotch whisky, without adequately protecting its interests and getting reciprocal concessions in areas such as mobility and migration, two people said on condition of anonymity.
“Certain undesired developments in the UK, a sudden stiff approach in negotiations by the British side on tariff issues, and unwarranted comments by British officials have certainly impacted the deal. A comprehensive FTA is unlikely by Diwali,” one person said.
{{/usCountry}}“Certain undesired developments in the UK, a sudden stiff approach in negotiations by the British side on tariff issues, and unwarranted comments by British officials have certainly impacted the deal. A comprehensive FTA is unlikely by Diwali,” one person said.
{{/usCountry}}“A two-stage is possible, the first one by the Diwali deadline and the second after resolving other issues. But this too will depend on a green signal from the top political leadership of the two countries,” the person added.
Recent remarks by UK home secretary Suella Braverman – expressing “reservations” that the trade deal could lead to increased immigration to Britain, and on Indian migrants being the largest group to overstay their visas – have not gone down well in New Delhi.
A statement issued by the Indian high commission in London in response to Braverman’s comments said that India is committed to work with the UK to facilitate the return of Indians who have overstayed their visas. Action has been initiated on all cases referred to the high commission, and the Indian side is awaiting “demonstrable progress” by the UK on fulfilling certain commitments as part of a bilateral Migration and Mobility Protocol, the statement said.
Asked about Braverman’s remarks and the FTA negotiations, external affairs ministry spokesperson Arindam Bagchi said there is “interest on both sides to conclude the FTA at the earliest”.
He said: “I think Diwali was set as a goal, but that’s a goal. I understand that intensive discussions are underway towards this and it’s continuing.” Bagchi added that “all negotiations are a part of give and take and…it needs to be a win-win for both sides”.
Bagchi said migration and mobility is an important element of the negotiations and both sides are expected to honour the Migration and Mobility Protocol. “We certainly are taking action on our elements and we would expect the UK side to also show…demonstratable actions on that,” he said.
Soon after Bagchi made the comments, a British government spokesperson said, “We remain clear that we won’t sacrifice quality for speed and will only sign when we have a deal that meets the UK’s interests.”
For India, migration and mobility has become a crucial part of all trade deals as the government wants to open up new opportunities for students and professionals through a liberal visa regime and matters related to social security.
“At a time when the two countries are negotiating a trade deal, there have been some incidents in the UK against people of Indian origin, and there were the adverse comments by UK officials. Success of any trade deal between two countries depends on their people,” the first person cited above said.
The person added that India is willing to provide tariff concessions over a period of time, provided London reciprocates. “It has been reported in the media that Indian industry has agreed to slash import duties on automobiles, but as of now, it is neither the official stand of the government nor it can be construed as an unconditional concession by the industry,” he said.
Reuters quoted sources on Friday as saying that Indian carmakers proposed cutting to 30% the tax rate on imported cars as part of the proposed trade deal with Britain.
“India has successfully signed an FTA with Australia and permitted concessional duty access to Australian wines above a certain price cap, a segment that does not compete with Indian liquor manufacturers. Similar concessions can be given on the basis of reciprocity,” he added.
Speaking at a meeting held on Friday to review country’s export performance, Union commerce minister Piyush Goyal said India would accord top priority to national interest in FTA negotiations. “FTAs to be entered into after thorough consultation with all stakeholders including industry and the government will not diverge from this approach for the sake of deadlines,” an official statement quoting him said. The meeting was attended by key representatives from export promotion councils (EPCs) and industry associations in New Delhi.
India’s commerce ministry, however, declined to comment on the matter. “Government of India is committed to work with the government of UK on all issues of interest in the negotiations for an India-UK FTA. It would not be appropriate, given that the negotiations are underway, to comment on any issue that is under discussion between the two countries. India’s approach has been to arrive at a mutually beneficial outcome which boosts economic growth and creates jobs,” a commerce ministry spokesperson said.
Prime Minister Narendra Modi and his former UK counterpart Boris Johnson had set the Diwali deadline for the FTA. “But with the changed attitude of the UK government, it will be difficult to catch this deadline for a comprehensive FTA in about two weeks,” a second person said.