Businesses in UK are not disappointed with the lapse of the Diwali deadline for conclusion of the India-UK free trade agreement (FTA) as they want the pact to be substantial, not fast, said Kevin McCole, MD of UK India Business Council (UKIBC).

“Many UK businesses were actually concerned about the Diwali deadline. They want it to be a meaningful trade deal. There was a concern that if speed was the priority, then substance would have been lost. Businesses want a comprehensive deal in goods and services. And they want something substantial, not fast,” he told businessline.

Target 2023

Highlighting the priorities for the UK in the “end-game’’ of negotiations, McCole said there were three main areas — tariffs across some sectors, services (specially knowledge intensive and digitally driven) and investment protection — that need more working on. With pace, positivity and political will, the deal can be clinched in 2023, he added.

India and the UK launched FTA negotiations in January 2022 targeting doubling of bilateral trade to $100 billion by 2030. The then British Prime Minister, Boris Johnson, set a deadline of concluding the negotiations by Diwali this year which lapsed as negotiations could not proceed fast due to the political turmoil in the UK.

With stability returning in the UK after appointment of Rishi Sunak as the Prime Minister last month, negotiations are set to resume and the sixth round is tentatively planned in December.

The UK government gave the negotiating team a mandate in January, based on inputs from stakeholders, which the team has been working on till date, McCole said.

Points of concern

As the talks enter the final phase, negotiators may be bumping against the boundaries of the mandate and ministers and politicians may need to start coming in to decide on the flexibilities, he added. For instance, for items such as wines and spirits and automobiles, while India has agreed to bring down tariffs, the UK wants steeper and wider cuts, said sources.

McCole said investment protection, especially ISDS (investor state dispute settlement), was another important area that the UK industry wanted to be covered adequately.

The model bilateral investment treaty (BIT) drafted by India is not attractive for most UK investors as it allows businesses to go for international arbitration only after exhausting all options under the Indian legal system. “This can take so many years and cause distress for investors. If India wants to project itself as an investor-friendly destination, disputes need to be resolved in one or two years, rather than a decade,” he said.