Intensive negotiations ongoing for Diwali trade pact with India, says UK

Intensive negotiations are ongoing to meet the target to conclude the majority of the India-UK free trade agreement (FTA) talks by Diwali, UK government sources said on Thursday.

Officials said that both countries continue to negotiate a “high-ambition free trade agreement” that could boost the UK economy by more than GBP 3 billion by 2035.

“The UK and India set a target to conclude most of the talks by Diwali (24th October) and intensive negotiations are ongoing,” sources said.

Officials familiar with the negotiations also sought to realign the issue of mobility by drawing a distinction between temporary business visas and long-term migration, saying business mobility is not the same as immigration because business mobility covers the temporary entry for talent to work for a specific time period in a trade partner country.

“Any commitments we seek on temporary entry will aim to encourage the best and brightest talent in India to temporarily work in the UK,” official sources said.

It follows UK Home Secretary Suella Braverman’s very vocal concerns over what she dubbed an “open borders” approach with India as part of an FTA, which many feared may have pushed the FTA negotiations off course from an October-end timeline because the issue of mobility lies at the heart of what India would consider a win-win trade deal. According to the UK government, any agreement with India on visas and migration would fall within the country’s wider points-based immigration system and be subject to Cabinet approval.

While the UK’s Department for International Trade (DIT) refused to comment on “live negotiations”, it did not rule out the prospect of the Diwali deadline being met and said the deadline was “focusing efforts and driving progress”.

“The UK has a close, positive working relationship with India and a thriving trade partnership worth over GBP 24 billion in 2021. We continue to seek improvements to our current trading relationship, and this is why we are negotiating a high-ambition Free Trade Agreement,” a DIT spokesperson said.

“We remain clear that we won’t sacrifice quality for speed, and will only sign when we have a deal that meets both countries’ interests,” the spokesperson said.

There has been intense speculation in recent days over the Diwali timeline for the FTA, which was announced by former Prime Minister Boris Johnson during his India visit in April. However, since then the UK has undergone much political upheaval with Johnson being replaced by Liz Truss and a new Cabinet team in place.

A trade deal with India, expected to more than double bilateral trade by 2030, is considered a major victory for the new Prime Minister in an otherwise tumultuous few weeks overshadowed by financial markets turmoil.

Strategic experts on both sides are of the view that if the Diwali deadline for the FTA is still met, the result may be a much less comprehensive deal than was expected, leaving key sectors open for future negotiations.

UK Trade Secretary Kemi Badenoch seemed to lay the groundwork for this last week, when she said that an FTA with India would not mean that “we can’t do even more later”. On the UK side, some of the key asks are around the opening up of India’s legal services sector and slashing of high tariffs on Scotch whisky. For India, the issue of talent mobility and digital data are among some key factors.