What lies ahead for the biggest India trade deal with the UK on free access to skilled workers?

What lies ahead for the biggest India trade deal with the UK on free access to skilled workers?

Negotiations between India and the UK have stalled over easier access to thousands of skilled workers from the South Asian country, which is likely to cause the completion of a free trade agreement to be postponed past the deadline of October.

Those who are aware of the matter claim that the UK wants to limit skilled workers’ movement, which would benefit Britain and prevent the planned trade agreement from being advantageous for both countries.

The position of New Delhi has become more rigid in the continuing negotiations as a result of the issues expressed by UK residence secretary Suella Braverman over immigration from India. India responded to comments made by stating that both countries should “respect” their “knowledge” of the topic of migration mobility.

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When finalized, the agreement can be India’s largest and most audacious free trade agreement. People familiar with the situation said that New Delhi will be attempting to recoup half a billion pounds in payments made by Indian workers to Britain’s social security system as part of the agreement. The people added that the UK’s offer to restrict the movement of skilled workers would tilt the planned trade agreement in favor of Britain and would not be beneficial to both countries.

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A representative for the Department for International Trade stated that the UK government “would not sacrifice quality for haste” and that it will only sign a deal if it serves the interests of both countries.

“We have successful commercial cooperation worth £24 billion in 2021 with India and a close, friendly working relationship. We keep looking for ways to strengthen our current trading partnership. The official continued, “This is why we are negotiating a high-ambition Free Trade Agreement.

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Britain and India started discussing a free trade deal in January, and talks were expected to be finalized by the end of October. However, people who spoke on the condition of anonymity because the exchanges are private claim that the lack of consensus implies that the deadline will be missed.

The deal would also give India a foothold to pursue an FTA with the EU, which, along with the US, is a big export market. India recently overtook the UK to take over as the fifth-largest economy in the world.

India’s trade agreement with the UK

According to the negotiation objectives, a trade agreement with India would give the UK the chance to “deepen economic and strategic connections” with this “vital partner.” According to the document, India is predicted to have the third-largest economy in the world by the year 2050, and a trade deal may benefit UK and Indian companies by lowering trade costs and expanding economic activity in both nations’ competitive advantages. A trade agreement with India would fit the government’s policy of “tilting towards the Indo-Pacific and advocating free trade,” according to the document.

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The main benefits of a trade agreement with India, according to the government, are:

  • Reduced obstacles to trade.
  • Increased chances for UK investments and services.
  • Supporting trade and innovation in the digital age.
  • For UK employees, more jobs.
  • Fostering prospects for UK-wide firms, particularly small and medium-sized ones.
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Any agreement with India “must work for UK consumers, producers, and enterprises,” according to the government. It promised to “uphold our high standards for the environment, labor, food safety, and animal welfare.” According to the text, “NHS, its services, and the price of medicines is not on the table” during the negotiations.

The committee questioned whether a full trade agreement could be finalized by the government’s own “ambitious but arbitrary” October 2022 date. The government “must not accept a substandard agreement solely to satisfy a deadline,” the committee ruled. A temporary agreement with India could “lock in certain benefits,” but if the UK “makes too many early compromises,” it could also lessen the likelihood of achieving a long-term agreement.

The committee criticized the negotiation objectives for not incorporating investor-state dispute settlement mechanisms or “an impartial and enforceable alternative,” given that one goal of the trade agreement was to promote UK investment in India.

The group told the government to release an “overarching trade policy” outlining how trade complements its “foreign, defense, environmental, and domestic objectives.” According to the research, India increased its commerce with Russia rather than participating in the international sanctions regime against it in reaction to the war in Ukraine. This was used by the committee as an illustration of the ambiguity around whether the UK intended to “factor this into our commercial relations with India.”

The UK and others have refrained from criticizing the Modi government’s connections to Russia due to India’s growing importance as a consumer market and as a geopolitical counterweight to China.

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Both the prime ministers of India and the United Kingdom, Narendra Modi and Boris Johnson, have promoted trade diplomacy as a component of their economic agendas. Following accords with the United Arab Emirates and Australia, India is pursuing trade agreements with the EU and Canada, while Downing Street sees an agreement with New Delhi as the centerpiece of its post-Brexit economic strategy.

edited and proofread by nikita sharma

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