India and the UK are looking to resolve pending issues in the bilateral free trade agreement (FTA) as both sides are hoping for early closure of negotiations in goods and services and also the bilateral investment treaty (BIT) being worked out simultaneously, sources said.
A team from India, which is likely to be led by Commerce Minister Piyush Goyal, may visit London in May to push the FTA talks towards finalisation, a source tracking the matter told businessline.
“There was good progress in the FTA talks during the UK Secretary of State visit to Delhi. Then there was a review of the progress in negotiations between Commerce Minister Piyush Goyal and the UK Secretary of State on March 24,” the source told businessline.
Finance Minister Nirmala Sitharaman’s visit to the UK earlier this month also provided positive momentum to the talks and it is hoped that the FTA, together with the BIT, will be finalised soon.
India’s negotiations for an FTA with the UK started in January 2022 under former UK Prime Minister Boris Johnson but talks were stalled last year when Britain’s Labour Party, led by Prime Minister Keir Starmer, swept to power in the July 4 elections after being in the opposition for over a decade.
FTA talks
The Starmer government took its time in going through the details of the negotiations and decided earlier this year to re-start the FTA talks when UK Business and Trade Secretary Jonathan Reynolds visited the country.
“While substantial ground has been covered in the negotiations after the talks re-started there are some tricky issues yet to be sorted out,” the source said.
India wants increased access for students and professionals in the UK labour market, as well as duty-free access for some key goods. In turn, the UK is demanding deep cuts in tariffs on goods such as scotch whisky, electric cars, lamb meat, chocolates, and financial services in India.
Some contentious areas, especially in dispute resolution mechanism, remain to be ironed out in the BIT as well that is being negotiated by the Finance Ministry in India with counterparts in the UK, the source added.
While the model BIT drafted by the Finance Ministry had provisions that were harsh in the area of dispute settlement, stands are being softened now. The 2024 India-UAE BIT has reduced the time period to pursue local legal remedies (before going for international arbitration) to three years. Moreover, the India-UAE BIT explicitly includes portfolio investments, which are excluded under the model BIT.
India and the UK had BIT negotiations earlier this month and are hopeful of ironing out the remaining sticky issues soon, the source said.