Uncertainty over Diwali deadline for India-UK trade deal

India has threatened to impose additional customs duties of 15% on import of 22 products, including whisky, cheese and diesel engine components from the UK

Uncertainty looms large over the proposed trade agreement between India and the United Kingdom although the two governments had earlier this year set Diwali on October 24 as the deadline for concluding the negotiations and signing the deal.

The UK's opposition to data localisation requirements of India and its demand to allow companies to bid for government contracts in India have resulted in an impasse in the negotiations for the trade deal, The Telegraph reported quoting a source close to the talks.

What also led to a gridlock in negotiations is India’s insistence on greater market access in the UK for its companies offering services, particularly in the Information Technology and healthcare sectors, sources told DH.

The government made it clear that it could commit to lowering tariff on whisky exported to India only when London would accept its demand for concession for its services industry and for a liberal visa regime to facilitate travel of its skilled professionals to the UK.

Read | Fears of watered-down India-UK free trade pact amid visa row

The UK also demanded market access for its legal and accounting services companies in India.

India conveyed its displeasure to the UK over British Home Secretary Suella Braverman’s recent comment expressing “concerns” and “reservation” over the possibility of the proposed trade agreement opening up doors for increased immigration from India to the UK. The comment also cast a shadow over the negotiations for the deal.

India has threatened to impose additional customs duties of 15 per cent on import of 22 products, including whisky, cheese and diesel engine components from the UK. India’s move came in retaliation to the UK imposing restrictions on import of steel products.

The government has been quietly working on a plan for a visit by Prime Minister Narendra Modi to London later this month to join UK PM Liz Truss in witnessing the signing of the trade deal. The proposed visit however appears to be unlikely now.

The officials of the two sides are now exploring the possibility of finalizing a limited-scope interim deal before the deadline, sources said.

Modi had hosted Truss’s predecessor, Boris Johnson, for a meeting in New Delhi on April 22, when they had set a Diwali deadline for concluding the India-UK trade deal.

Without specifically referring to India-UK negotiations, Commerce Minister Piyush Goyal recently said that the Modi government would take into account views of all stakeholders and accord top priority to the national interest in negotiations for trade deals. He went on to say that the government “would not diverge from this approach for the sake of deadlines”.

British Trade Secretary Kemi Badenoch indicated that India and the UK could “do even more later” even if a trade deal was struck with India now. She sought to lower the expectation by stating that the India-UK trade deal might not have everything that the services sector would like it to contain.

The UK also conveyed that it was not keen to compromise on its national interests only to meet the deadline to conclude a deal.

The two sides formally launched negotiations on the trade deal on January 13 this year. The British government’s strategic approach for the talks with India included seeking predictable and open regulatory principles so that the UK firms could access digital markets in India and operate across borders freely and in fair competition. London also had among its objectives asking for New Delhi’s “commitments on free and trusted cross-border data flows”, preventing “unjustified data localisation” and for maintaining “the UK’s high standards for personal data protection”.