A trade deal between India and the UK is heading for cold storage because of London’s indecisiveness over key issues such as business mobility, two officials aware of the development said, adding that the matter would be taken up by the new regime after the general elections.

The inking of a free trade agreement (FTA) between India and Oman is expected before New Delhi and London conclude a mutually acceptable bilateral deal, they said, requesting anonymity. “FTAs are signed keeping India’s long-term economic interests in mind. There is no political significance of any FTA in the forthcoming elections,” one of them said. General elections in India is expected to be announced this week.

Read here: India-UK FTA dialogue to enter final stage on Jan 10

New Delhi on Sunday signed an FTA with a group of four European countries — Iceland, Liechtenstein, Norway and Switzerland — who committed to invest $100 billion in India to create one million direct jobs over 15 years. This was the third bilateral deal India signed since 2022. It signed an FTA with the United Arab Emirates (UAE) on February 18, 2022, followed by another deal with Australia on April 2 that year.

FTA negotiations with the UK are in an advanced stage, the officials said. Barring a couple of issues, almost all issues have been resolved. But these unresolved issues are of critical importance to India, which can wait and take up the matter in the first 100 days of the new government, they added.

The possibility of an FTA with the UK before general elections in India is remote, they said. Quoting UK trade minister Kemi Badenoch, News agency PTI on March 8 reported from London that a trade deal being negotiated with India was “possible” to be concluded before a general election in the country but the UK did not want to use that as a deadline. “India is still very protectionist, where we are very, very liberalised,” the report quoted Badenoch as saying.

While British negotiators want tariff concessions for alcohol and automobiles in the burgeoning Indian market, India demands greater mobility for its professionals in the UK. “FTAs must be mutually beneficial. They can’t be one-sided,” the second official said, adding that easier business mobility is a must for India’s services exports.

Indian industries were unwilling to offer import duty concessions to British manufacturers without London allowing easier mobility for Indian professionals, HT reported on October 3, 2023. If business mobility, or easier temporary movement of Indian professionals to the UK for business purposes, is taken out of the FTA negotiations, there won’t be any significant gain for India, as most Indian goods (more than 60% of total merchandise) already have duty-free access to the UK market, and most of the other items attract a low tariff of 5%, HT reported.

The British side is seeking greater access to the Indian market for items such as dairy products, automobiles including electric vehicles and Scotch whisky. India has a very high import duty on automobiles (100%) and whisky (150%).

Indian industry has expressed their willingness to substantially reduce tariffs in automobiles and whiskey provided London reciprocates similar concession on the principle of equity and keeping Indian climatic conditions in mind. Indian industry demands that premium Indian whiskies should be treated at par with Scotch, while London is not willing to classify an Indian product as a whiskey unless it is matured for at least three years, while 12-18 months are enough in Indian climatic conditions.

Read here: EAM Jaishankar to visit UK during Nov 11-15 amid protracted negotiations on FTA

the India-UK FTA negotiations that started on January 13, 2022, progressed fast and the two partners concluded five rounds of talks by July 29 that year and former UK premier Boris Johnson had hoped to ink the deal by Diwali in October 2022. However, the political instability in the UK and unwarranted remarks by its interior minister under short-lived Liz Truss’ government put a brake on its progress.

The talks resumed after the Rishi Sunak government came to power. Given the widespread impression that the opposition Labour Party will win the next UK election, there is apparently little appetite in New Delhi to take forward the trade deal.