Image Source : NARENDRA MODI (X) PM Modi with his British counterpart Rishi Sunak on the sidelines of the G7 Summit in Italy.

London: The United Kingdom has moved into its final phase of campaigning ahead of the national elections scheduled for Thursday (June 4) in a high-stakes contest between the Conservative and the Labour Party, with the Rishi Sunak-led party predicted to be ousted from power after 14 years. The 43-year-old British-Indian leader will take on Labour leader Keir Starmer, 61, who is widely expected to become the next British Prime Minister.

In all the hue and cry about the upcoming UK elections, one thing that remains prominent on both sides of the political spectrum is a free trade agreement (FTA) with India – including a pact to enhance the GBP 38.1 billion bilateral trading partnership. The India-UK FTA is high on the agenda regardless of the election result in favour of Starmer’s Labour or Sunak’s Tories.

The FTA talks began in January 2022 year with Diwali 2022 set as the initial deadline by former British Prime Minister Boris Johnson. Under Sunak-led Tory government, no new timelines were set but both sides were looking to get things signed off before a general election year in India and the UK in 2024. It remains to be seen how far will these talks progress if the opinion polls are correct and Labour comes to power this week.

India-UK FTA talks

Prime Minister Narendra Modi and Sunak, along with the delegations from the respective countries, have made strenuous efforts to strike a free trade agreement. The two leaders had agreed at the G20 Summit last year in New Delhi to accelerate the Free Trade Agreement (FTA) talks with the hope of signing off before India’s general election. However, the trade talks stalled as Sunak abruptly called for elections on July 4, a month after the results of the Lok Sabha elections were announced.

India and the UK have held 13 rounds of talks on the FTA and the 14th round started in January, where they were looking at sealing it by bridging differences on certain contentious issues including mobility of people and import duty concessions on certain items. There are 26 chapters in the agreement, including goods, services, investments, and intellectual property rights.

The Indian industry is demanding greater access for its skilled professionals from sectors like IT and healthcare in the UK market, besides market access for several goods at nil customs duty. On the other hand, the UK is seeking a significant cut in import duties on goods such as scotch whiskey, electric vehicles, lamb meat, chocolates, and certain confectionary items.

“We will finalise a free trade agreement with India, alongside a deeper strategic partnership on technology and defence,” reads the Conservative Party manifesto, spelling out the British Indian leader’s vision. 

What is the Labour Party’s stand?

Meanwhile, the Labour Party has been focusing highlighting how they stand ready to get the FTA over the line after the Tories missed their Diwali 2022 deadline. “Many Diwalis have come and gone without a trade deal and too many businesses have been left waiting,” David Lammy, the party’s shadow foreign secretary, said in his address at the India Global Forum (IGF) in London last week.

“My message to [Finance] Minister Sitharaman and [Trade] Minister Goyal is that Labour is ready to go. Let’s finally get our free trade deal done and move on,” he said. The Labour manifesto also mentioned a “new strategic partnership” with India that will include an FTA as well as deepening cooperation in areas like security, education, technology and climate change. The Labour leader also criticised the Conservative government, which has been in power in the UK since 2010, has “overpromised” and “underdelivered” in relation to India.

The UK shadow secretary further said that there is a lot more that needs to be done in the India-UK relationship, adding that it needs to go beyond whoever is in office. “India is only our 12th trading partner and that is why Keir Starmer changed Labour Party…and in that changed Labour Party are the aspirations of a free trade agreement between our two nations is a floor and not a ceiling, on our ambition,” Lammy said. 

The UK-India Business Council (UKIBC) has its own manifesto that mentions a stronger bilateral relationship in the lead-up to the elections. “Much work has already been done to lay the foundations of an ambitious free trade agreement (FTA) between the UK and India… Concluding the FTA promptly should be a priority for the UK government. Getting this right will mean higher economic growth, better productivity and increased private sector investment in the UK,” it said.

The UKIBC also recommended that the UK government prioritises completion of the negotiations and ratification of a win-win UK-India FTA, that benefits our goods and services sectors. It said that the free trade agreement between India and the UK will build trust and strengthen the bilateral relationship in important areas like defence, security and climate change.

Challenges to India-UK FTA

Meanwhile, Lord Christopher Fox, a Liberal Democrat peer who sits on the House of Lords International Agreements Committee which scrutinises trade deals, has warned of “clear stumbling blocks” in the way towards an FTA. India has also raised concerns about the fairness of rules applied to Indian workers temporarily transferred to the UK on business visas.

Indian High Commissioner to the UK Vikram Doraiswami pointed out that an FTA with the UK was in the Prime Minister Narendra Modi-led government’s 100-day priority and that Delhi had placed an “unprecedented offer” on the table. What we’re trying to do with this free trade agreement is to increase the depth or the extent of ambition, including in goods and services, that we’d like to offer to the UK,” he said.

“Visas are not the first priority for us in an FTA. We are not looking at the FTA as a means to bring people to the UK, that is not the objective. What we’re looking for is whatever is reasonable within the broad framework of international trade and services under Mode 4 of GATS [General Agreement on Trade in Services of the World Trade Organisation] to be able to have persons travelled for intercompany transfers etc,” he stressed, with reference to the UK media’s focus on visas in relation to the trade talks.

(with inputs from agency)

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