Indian companies are the second biggest foreign investors in UK, data shows, adding weight to New Delhi’s push for hiring flexibility for its businesses.
A potential carbon tax that Britain is considering on steel imports and rules of origin issues, and longer term work options for Indian students in the UK are also likely to be discussed during the weeklong talks that started between Indian and UK officials Monday, the people added.
The goal posts and time lines on finalizing the outlines of the pact — which is expected to double bilateral trade between the two nations by 2030 — have shifted a few times. The UK had previously said it wanted to finalize the deal by the Hindu festival of Diwali last year. Business and Trade Secretary Kemi Badenoch visited India in December in an effort to move forward with the deal.
The latest round of talks comes as ties between the two countries have been strained in recent months after the Indian High Commission in London was vandalized and the British Broadcasting Corp. ran a critical documentary about Prime Minister Narendra Modi.
“It’s part of a broader relationship with India that is growing,” Sunak said on the FTA at a business event in London on Monday.
A trade deal with India has long been a prized goal for the British government, which wants to cut tariffs and open opportunities for UK services to operate in the South Asian country. For New Delhi, a free trade pact with the seventh largest buyer of Indian goods is crucial to hit its target of $2 trillion in exports annually by 2030 and to become a top choice for companies shifting supply chains away from China.
However, a spokesperson for UK’s business and trade department said, “The UK has been clear in negotiations that trade and immigration are separate policy areas.”
“We are discussing temporary business travel within the FTA to allow professionals to deliver services in each other’s markets,” the spokesperson added. “However, a free trade agreement with India will not include commitments on immigration.”
India’s Trade Ministry did not respond to an emailed request for a comment.
Total bilateral trade between India and UK rose more than 16% to $20.3 billion in 2022-23, according to provisional Indian government data.
New Delhi wants to discuss a levy on imports with higher carbon footprints, a move it’s concerned may hurt its metal exports, two people said. It has also added on the demand that Indian students be allowed to stay in the UK and seek employment for a longer period after they graduate from British colleges and universities, one of the people said.
Currently Indian college graduates can stay in the UK for two years and Phd students for three.
India will also continue to push for a more balanced social security system for its workers in the UK, the people said. Currently Indians, and other foreign nationals, pay a larger percentage of their wages to the safety net unless they stay for longer terms and current visa norms prevent that, the people said.
Key demands from the UK include lowering import duties on automobiles and Scotch whisky, one person said.
There is “strong political will on either side” to finalize the agreement, said Richard Mccallum, group chief executive officer of the UK India Business Council.