UK-India FTA deal: From Scotch whisky tariff to business visa — areas that still need negotiations

For the Indo-British business community, Rishi Sunak becoming the new UK prime minister has again revived the question of where the Free Trade Agreement, which has been in the works for a while now, stands.

UK's Secretary of State for International Trade, Greg Hands, addressed this in the House of Commons on Wednesday and it seems more negotiations and the next round of talks over the deal are expected shortly.

In a free trade agreement, two countries either eliminate or significantly reduce customs duties on the maximum number of goods traded between them, besides easing norms for promoting investments and services trade.

Hands informed the UK parliament that the majority of chapters in the UK-India FTA have been closed. "Sixteen chapters across 26 policy areas agreed so far," he said.

However, negotiations on three-four issues — tariffs on professional, financial and legal services; tariffs on Scotch whisky; SMEs and terms of business visas — are still awaited.

"Many exporters are facing considerable tariffs on professional, financial and legal services. (Also,) terms of business visas remain an active area of negotiation," Hands said.

Another debated point has been the tariff reduction on imported Scotch whiskey by India. The British have been demanding lower tariffs which currently stand at 150 percent. As per reports after the last round of negotiations, India has sought more time to make this happen.

"Tariffs on Scotch whisky going to India are currently at 150 percent. (We) can't guarantee to eliminate them," said Hands.

"We are confident of getting a good deal for business visas and are negotiating a chapter for SMEs (small and medium-sized enterprises)," the Minister of State for Trade Policy said.

The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022.

The UK also sees "huge" potential for gain for India in areas of investment and life sciences. "The content, depth and breadth of FTA are more important than the data it delivers," Hands said.

He further emphasised that a strong UK-India FTA will boost UK's economy by over £3 billion by 2035. He said that the FTA can cut red tape and make it cheaper for UK companies to sell into India's dynamic market, helping drive growth and support jobs across every nation and region.

Greater access could help UK businesses over a billion more consumers including India's growing middle class estimated to reach a quarter of a billion by the year 2050 and give them a competitive edge over other countries that don't have a deal with India, he said.

Describing India as an "economic superpower", the minister said the UK was working towards the "best" Free Trade Agreement (FTA) that is beneficial to both countries.

The minister, however, placed a condition for signing the deal. he said the India-UK FTA "won't be signed "until it is fair, reciprocal and in best interests of UK's people and economy."

India and Britain launched negotiations for the FTA in January with an aim to conclude talks by Diwali but the deadline was missed due to a lack of consensus on issues.

As part of the deal, the UK is mulling increasing the number of business visas granted to Indian nationals. Hands said an agreement with India will give exporters greater access to a billion consumers.

But, according to a Bloomberg report, "loosening visa arrangements could also put Sunak on a collision course with Home Secretary Suella Braverman".

Braverman had recently commented on "Indian visa overstayers". She triggered a controversy saying, "I do have some reservations. Look at migration in this country — the largest group of people who overstay are Indian migrants."

“I have concerns about having an open-borders migration policy with India because I don’t think that’s what people voted for with Brexit," Braverman had reportedly said.