UK-India trade talks enter ‘final, trickier’ stage – government sources

UK trade talks with India are reaching their “final but trickier” stages, according to government sources.

Trade Secretary Kemi Badenoch is visiting India for a meeting of G20 trade ministers this week.

There has been speculation about whether a trade deal may be struck before Rishi Sunak visits India in September.

But the BBC has been told there is currently no expectation in government a full deal will be agreed by then.

Government sources said they hoped a deal could now be “months” away, but they stressed there were still some “big nuts to crack”.

A trade deal with India has long been seen in government as one of the biggest prizes of all deals the UK could strike with other nations following Brexit.

Former Prime Minister Boris Johnson promised in April last year to get an agreement “done” by Diwali in the autumn of 2022 – but that deadline was missed.

The UK has been particularly keen to strike an agreement that could bring down tariffs on UK exports including cars and whisky, which currently face triple-figure tariffs, or import taxes, in India.

Those tariffs mean UK products can have a much higher price tag in India, making them less competitive.

Trade talks have faced some hurdles in the last year, in particular due to British ministers’ refusal so far to grant more visas to Indian workers.

The UK has been keen to get India to allow more UK City firms and service industries to set up business in the country.

William Bain, head of trade policy at the British Chambers of Commerce, said this would be the “big win” for British businesses – particularly UK travel, business or financial services.

“Up to 80% of the UK economy is services-based,” he said.

But he added: “That’s one of the last areas that India would want to make agreement at this point, because that’s where it has leverage.

“Having much more visa access to the UK will be part of the key things to get a deal over the line.

“If there is a future stage later in the year where the two prime ministers meet face to face for a further push – it’s really going to be that issue of services access in return for better access for Indian nationals in the UK.

“It is a bigger export market and it’s one which is rapidly increasing its prosperity. Also India hasn’t done many trade agreements, so the UK is relatively front of the queue here.”

Ms Badenoch is travelling to India to meet fellow trade ministers in the G20 group of wealthy nations, rather than to hold formal negotiations on a UK-India deal.

However, talks between officials from both sides will be ongoing in India during the visit, and she is set to have a one-on-one meeting with her Indian counterpart after the G20 meeting is over.

She will also be talking to the so-called B20, the business equivalent of the G20, chaired by Indian conglomerate Tata, which recently announced more than £4bn of investment in a gigafactory in Somerset.

The UK is hoping to proactively encourage other Indian investors to invest in the UK.

There have been some media reports, particularly in India, suggesting that a deal is “close” and could be reached to coincide with Rishi Sunak’s visit for the G20 leaders’ summit in September.

But officials have indicated that it is unlikely a full deal will be agreed by then.

Government sources stressed that, while the last round of talks “closed some chapters”, negotiations get “harder, not easier”.

UK officials are preparing for there to be a need for further talks following the trade secretary’s visit this week.

Mr Sunak is expected to receive a warm welcome when he visits in September. His appointment as the first British Indian prime minister was one of the top stories across Indian media.

Indian broadcaster NDTV ran a headline at the time saying: “Indian son rises over the empire. Rishi Sunak first Indian origin UK PM. History comes full circle in Britain.”

Indian Prime Minister Narendra Modi has described him as the “living bridge” of UK Indians, while the Times of India suggested the appointment of a Hindu PM had brought India Diwali cheer.

A department for business and trade spokesperson said: “The UK and India are committed to working towards the best deal possible for both sides.

“We’ve made good progress in closing chapters, and are now laser-focused on goods, services and investment.

“While we cannot comment on ongoing negotiations, we are clear that we will only sign when we have a deal that is fair, balanced, and ultimately in the best interests of the British people and the economy.”