India, UK struggling to make progress in free trade talks: Reports

India and Britain are struggling to make progress in free trade talks due to differences on some key tariff lines and investment protection rules, making a deal during Prime Minister Narendra Modi’s second term that ends unlikely. next year, Indian sources said.

The two nations cannot agree to any concessions on tariffs imposed by India on car and liquor imports, a government official with direct knowledge of the matter said.

In addition to the tariffs, Britain is also pressuring India to agree to strong investment protection provisions, either as part of the deal or in a parallel investment treaty, according to a second government official.

“Britain has insisted on investor protection if a final deal is reached,” said the person with direct knowledge of the talks.

A deal between India and the UK is crucial for New Delhi, which hopes to become a bigger exporter while the UK would have wider access for its whiskey, premium cars and legal services.

Both countries aim to double bilateral trade by 2030 through said agreement.

For India, a deal with the UK would be the first with a developed country after it signed an interim trade pact with Australia last year. It comes at a crucial time for Modi, who is seeking to cement India’s business-friendly image in the run-up to next year’s national elections.

Britain, on the other hand, has prioritized a deal with India as part of its Indo-Pacific foreign policy, which aims to improve ties with the region’s fast-growing economies.

The main disagreement over investment protection provisions is Britain’s insistence that its companies be allowed to seek international arbitration if a dispute arises without first going to Indian courts, said the second government official directly involved.

This would be a marked departure from India’s current ruling that urges companies to exhaust local resources first, and is not agreed with by the Indian government, a third senior government official said.

“We had kept November as another soft deadline. But it doesn’t look like this is going to work out until at least next year.”

Maybe after the general election in India,” a fourth government official told Reuters.

Both nations are set to hold general elections next year, in which India’s Modi will seek a rare third term, while British Prime Minister Rishi Sunak faces a tough test of electoral popularity after an irregular term for the party. Conservative.

By the end of April, countries were unable to complete discussions on more chapters than in December. They have agreed to the terms of 13 of the 26 chapters that make up the pact.

The two countries have also ruled out the possibility of an interim pact, two of the sources said.

All of the officials spoke to Reuters on condition of anonymity as negotiations on the trade deal are private.

India’s ministries of commerce, finance and foreign affairs did not respond to a request for comment.

A spokesman for the UK’s Department for Business and Trade said the two countries are “committed to working towards the best possible deal for both parties.”

“We are clear that we will only sign when we have a deal that is fair, balanced and ultimately in the best interest of the British people and the economy,” the person said.

Sunak’s approach of focusing on quality over deal speed is in stark contrast to Boris Johnson, who as prime minister had set a Diwali deadline last October for a deal, which was later missed under his successor’s tenure. Liz Truss.