Mobility issues, carbon tax exemption and visa key issues in trade talks between India and UK

New Delhi : Britain is unlikely to accede to India’s request for exemption from the proposed carbon tax, while a four-member team of senior commerce ministry officials from New Delhi continues talks in London, a British daily reported. Unresolved issues are hampering the free trade agreement.

The team left for the UK on April 16 to discuss the carbon tax, India’s demand for more visas and mobility rights for its skilled professionals, duty free access for some goods as well as the UK’s demand for market access . As for British-made electric vehicles, a person familiar with the discussions said, requesting anonymity.

On carbon tax, New Delhi’s proposals range from a longer transition period to exemption from the tax.

Although FTA negotiations are said to be in an advanced stage, there have been delays due to the issues mentioned above, which is delaying the signing.

The Guardian newspaper on Friday quoted a UK government official who was briefed on progress in the talks as saying that India is seeking an exemption from the planned Carbon Border Adjustment Mechanism (CBAM) on the grounds that This is a developing country.

The newspaper said any decision to exempt India from the carbon tax would be “controversial”, as the plans would support UK steel producers by reducing emissions and leveling the playing field with countries with low or no carbon levy. Are designed to.

A British delegation visited New Delhi in March in the hope of making progress on unresolved issues. After this the Indian delegation left for London for further talks.

Both sides are also holding virtual discussions on FTA.

A Commerce Ministry spokesperson did not respond to emailed queries.

India and the UK began negotiations for an FTA in January 2022, which have gone through 14 rounds so far.

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

Trade between India and the UK is expected to grow from $17.5 billion in the financial year 2022 (FY22) to $20.36 billion in FY23. However, the FTA’s journey has been fraught with delays, with its initial deadline now over a year away, largely due to complex issues such as professional visas, tariffs on various goods and migration concerns – a problem in the UK since Brexit. Sensitive topic.

Both the EU and the UK are set to impose taxes on steel and aluminum imports through the CBAM from January 2026, said Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), an economic think tank.

“Once implemented, these FTAs ​​will enable products from the EU and UK to enter the Indian market without any duty. However, Indian products entering the EU and UK will face additional payments equivalent to tariffs ranging from 20% to 35% in the form of CBAM duty,” said Ajay Srivastava, founder of economic think tank Global Trade Research Initiative (GTRI). he said.

“India should insert an appropriate text in the FTA chapters to deal with this possibility. Any FTA without resolving the CBAM issue will be one-sided and disastrous for India.”