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Business News/ Economy / Mobility issues, carbon tax exemption, and visas key issues in trade talks between India and the UK
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Mobility issues, carbon tax exemption, and visas key issues in trade talks between India and the UK

A four-member team from India, comprising senior officials from the trade ministry, which left for the UK on 16 April, has been discussing unresolved issues related to the free trade agreement (FTA) with their UK counterparts in a bid to finalize the deal

A team, which left for the UK on 16 April, has been discussing the carbon tax, India's demand for more visas and the right to mobility for its skilled professionals, duty-free access for certain goods as well as the UK's demand for market access for British-made electric vehicles. (AP)Premium
A team, which left for the UK on 16 April, has been discussing the carbon tax, India's demand for more visas and the right to mobility for its skilled professionals, duty-free access for certain goods as well as the UK's demand for market access for British-made electric vehicles. (AP)

The UK is unlikely to accept an Indian request to be exempted from a proposed carbon tax, a British daily reported, even as a four-member team of senior commerce ministry officials from New Delhi continued talks in London to try and iron out unresolved issues holding back a free trade agreement.

The team, which left for the UK on 16 April, has been discussing the carbon tax, India's demand for more visas and the right to mobility for its skilled professionals, duty-free access for certain goods as well as the UK's demand for market access for British-made electric vehicles, said a person aware of the discussions, requesting anonymity.

On the carbon tax, New Delhi's proposal ranges from a longer transition period to exemption from the tax.

Although the FTA talks are described as being at an advanced stage, the issues mentioned above have dragged on, delaying the signing.

The Guardian newspaper on Friday quoted a UK government official, who has been briefed on progress in the talks, as saying India was asking to be exempted from the planned carbon border adjustment mechanism (CBAM) on the grounds that it is a developing country.

Any decision to exempt India from a carbon tax would be “controversial", the paper said, as the plans are designed to reduce emissions and support UK steel producers by levelling the playing field with countries that have a lower or no carbon levy.

A British delegation visited New Delhi in March hoping to push through with the unresolved issues. Following this, the Indian delegation left for London for further talks.

Both sides have also been holding virtual discussions on the FTA.

The commerce ministry spokesperson did not respond to emailed queries.

India and the UK launched talks for an FTA in January 2022 with 14 rounds having been held so far. 

Last month, Prime Minister Narendra Modi and his British counterpart Rishi Sunak discussed an early conclusion, giving the negotiators a final push.

Trade between India and the UK has grown from $17.5 billion in fiscal year 2022 (FY22) to $20.36 billion in FY23. However, the FTA's journey has been fraught with delays, now exceeding a year past its initial deadline, largely due to complex issues like professional visas, duties on various goods, and migration concerns—a sensitive subject in the UK since Brexit. 

Both the European Union and UK are set to tax import of steel and aluminium, through CBAM from January 2026, said Ajay Srivastava, founder of economic think tank Global Trade Research Initiative (GTRI)

“Once implemented, these FTAs will enable products from the EU and UK to enter the Indian market without any duties. However, Indian products entering the EU and UK will face additional outgo equivalent to tariffs ranging from 20% to 35% as CBAM charges," said Ajay Srivastava, founder of economic think tank Global Trade Research Initiative (GTRI).

“India must insert a suitable text in the FTA chapters to deal with this possibility. Any FTA without resolving CBAM issue will be one-sided and disastrous for India," he added.

 

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Published: 19 Apr 2024, 06:08 PM IST
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