The UK’s trade secretary, Kemi Badenoch, is on her first visit to India to discuss the future of the long-awaited free trade agreement (FTA) between India and the UK with her counterpart Piyush Goyal, Indian minister of commerce and industry. The trade deal – which was supposed to have been signed by Diwali – was delayed indefinitely, thanks to the significant changes in the UK government, where prime ministers and their cabinets have been changing quickly.
If this wasn’t enough, Suella Braverman’s statement casting doubt over the granting of visas to some Indian students and migrants added salt to the wound, with the Indian authorities reportedly upset with the incumbent home secretary’s remarks.
India-UK trade deal
Reports suggest that the trade deal is almost completed, with negotiations due in just three to four chapters. The disagreement predominantly lies around issues of trade in alcohol, immigration, and intellectual property.
The deal negotiations, prima facie, appear to be a clash of self-interest, for India, in terms of visas, for UK in terms of the alcohol market and for third parties concerning intellectual property.
Challenges remain in the following areas:
At present India charges a 150% import duty on alcoholic beverages. The UK wants India to cut down on this import duty. The UK plans to unlock a potential market worth billions of pounds for its scotch whisky, from a country poised to become the third-largest world economy in less than 30 years. As per a UK government press release, The UK exported £146mn worth of whisky to India in 2021.
Immigration is probably the biggest bone of contention within the discussions of the trade deal. While India, as part of the trade discussion, is seeking easier visa norms and relaxation on Indian immigration into the UK, especially for skilled workers. The UK, on the other hand, seems to be resistant to this demand, as the government faces domestic pressure to control immigration.
Moreover, the Rishi Sunak administration might just consider curbing visas for foreign students taking low-quality degrees and bringing in dependents. A move that clashes with Indian demands.
However, one more positive in this aspect is the visa deal announced by UK-India, on the sidelines of the G20 Summit in Bali, Indonesia, where up to 3,000 visas will be granted to degree-educated young Indian nationals to work in the UK for up to two years. This might be a door through which a solution can be reached.
Intellectual property (IP)
A leaked draft of India-UK FTA, on the chapter for IP, has caused grave concern within the Indian market, especially when it comes to healthcare. The draft indicates that the UK wishes for tougher IP protection.
The leaked draft under ArticleE.2(2), states, “Each party shall treat any new medical use for a known substance or composition as capable of being a patentable invention”.
What this translates to in lay terms is that any new medicine produced from a known component, can be patented.
The global NGO, Médecins Sans Frontières (MSF) has sought that the UK government withdraw this demand and urged India to reconsider as it thinks that any acceptance will have a devastating impact on global supply of generic medicine.
India is one of the major suppliers of generic medicines. The Lancet quotes Leena Menghaney, South Asia Head of MSF’s Access Campaign:
“Introducing more and more intellectual property hoops for generic manufacturers in India to jump through will have a chilling effect on the country’s ability to supply millions of people around the world with affordable, lifesaving generic medicines.”
UK trade deals post Brexit
The UK has been pushing for trade agreements with India, the US, New Zealand, and Australia. The primary reason behind this is to boost economic trade post Brexit. The UK has reportedly signed 71 trade deals since leaving the EU, but most of these have simply been a copy and paste of existing EU deals, with no new exclusive terms.
The UK FTA with the US lies in limbo, with the deal not even being discussed at the G20 summit when Prime Minister Sunak met President Biden in Bali. A deal here has the potential to boost the UK economy as the US is already a major trading partner – total trade in goods and services between the two countries in 2021-2022 amounted to £234.7bn.
The deals with New Zealand and Australia, being the first signed post Brexit, have received a fair share of criticism. The potential impact on UK GDP is minimal and will take many years to come through. Former environment secretary George Eustice alleged recently that the farming community were “thrown under the bus” amidst the “rushed negotiations” to secure the deal with Australia.
Close to agreeing a deal
With the Diwali deadline missed and the Sunak government seemingly stable, the FTA talks have restarted. With the sixth round commencing last week, reports suggest that a deal can be closed by March 2023. A successful deal is vital for the UK as it looks for sources of income and investment in midst of economic crisis and recession.