India-UK FTA: Commerce Department turns to PMO for directions

The Prime Minister’s Office (PMO) is likely to take the final decision on certain tricky issues in the India-UK Free Trade Agreement (FTA) negotiations, yet to be resolved, to see if the pact can be concluded before the general elections, sources have said.

These issues include the liberalisation of business visas, rules related to intellectual property rights, market access for whisky, automobiles,and financial services, and a social security pact.

• Also read: Scope of India-UK FTA

“Negotiators from India and the UK have been holding intense talks in New Delhi since January 10, trying to narrow gaps, which are expected to continue. The Commerce Department is in close consultation with the PMO now, as a political call will need to be taken on the handful of remaining issues if the negotiations are to be concluded before the elections,” the source said.

Both India and the UK are keen that the FTA should be finalised by the present regimes, and the matter should not spill over after the elections in the two countries, the source added.

• Also read: India-UK FTA: Gaps yet to be covered in several chapters

Key demands

While officials have successfully concluded negotiations on most of the 26 chapters in the India-UK FTA pact, there are some matters of importance to both sides that remain vexed.

Of utmost importance to India is its demand for the liberalisation of business visas, which the UK has been resisting, the source said. More business visas are important for Indian professionals, especially in the IT industry, and these demands have been key for India in most of its free trade pact negotiations.

New Delhi also wants to get into a social security pact with the UK so that its short-term workers in the country don’t have to contribute to social security.

Another important ask is an assurance from the UK that the gains from the FTA would not be nullified by the imposition of a carbon tax, on the lines of the EU’s Carbon Border Adjustment Mechanism (CBAM), in the future, as officials had earlier indicated.

The UK’s wish for tighter IPR regulations that will go beyond the WTO’s TRIPs Agreement is something India is resisting, as it does not want “ever-greening” of patents and a situation where its generic producers are threatened, the source said.

Other issues that may not have been fully settled include duty cuts for Scotch whisky, automobiles, and auto parts demanded by the UK under the stipulations on rules of origin that prescribe the minimum processing that needs to happen in a FTA partner country for a good to qualify for duty cuts.