The possibility of a month-end conclusion of the India-UK FTA talks hangs in the balance as last week’s crucial round of negotiations failed to bridge differences in critical areas, including rules of origin, access for professional services, tariff cuts for key products, and work visa liberalisation, sources said.

The Commerce and Industry Ministry is reaching out to line ministries, including food processing, finance, agriculture, and heavy industry, for guidance on how to proceed as officials from both sides are continuing to negotiate despite the physical round coming to an end, a source tracking the matter told businessline.

“The UK has been unflinching in its demand for relaxed provisions for rules of origin (which determine the country of origin of a product), especially for automobiles and processed food, and greater market access for Scotch Whisky and cars, despite India’s refusal to go beyond its comfort level,” the source said.

Rishi Sunak’s visit

British Prime Minister Rishi Sunak is expected to visit India this month-end to bolster bilateral economic and diplomatic ties and possibly finalise the India-UK FTA, together with Indian Prime Minister Narendra Modi, by taking some tough political decisions. No dates have, however, been officially announced by either the UK or India. The FTA is expected to double bilateral trade to $100 billion by 2030.

As rules of origin (ROO) prescribe the minimum processing which needs to happen in a FTA partner country for a good to qualify for duty cuts, they are crucial for the negotiations.

India opposes liberal ROO

India does not want liberal ROO for items such as automobiles, processed food and engineering goods as it fears that goods from EU countries could get exported to India at preferential duties couched as UK products.

“Many companies in the UK still have their supply chains integrated with companies from the EU. They source a lot of inputs from the bloc. Strict ROOs which prescribe high level of processing in the FTA country may result in several UK products becoming eligible for FTA benefits because of high input content from the EU. That is why UK is adopting a hard posture in the ROO talks and want liberal product specific rules for several items,” the source explained.

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Wranglings on the final duty cuts and their spacing out for critical products like Scotch Whisky and automobiles are still on but may be settled with some political push, the source added.

UK’s objections

UK is also miffed at not getting enough openings for its professional services, including law and accountancy, while India wants to make at least some gains in work visas, which the British are not willing to offer.

“Everything is uncertain, including Sunak’s visit. But the fact is that officials in both countries are trying their best to close as many gaps as possible so that the  leaders could attempt to close the deal when they meet,” the official said.

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