Boris Johnson will urge Narendra Modi, his Indian counterpart, to cut import duties on British whiskeys and cars as part of an ambitious plan to negotiate a temporary free trade agreement. time in less than a year.
The British Prime Minister will announce a goal of “more than doubling trade with India to £ 50 billion by 2030” during a visit later this month to New Delhi, according to a government document seen by the Financial Times, although note acknowledges that securing a full commercial deal will be “challenging”.
“Indian Trade Policy Note 10” confirms that “mobility is likely to be India’s priority attack requirement and will be a sensitive issue” – referring to perennial demand. of New Delhi on more access to UK visas for university students and workers.
The document, marked as “officially sensitive”, also warned that India “did not have a good delivery record”, commenting that negotiations over the past decade on a free trade agreement with The EU, Australia and New Zealand were all delayed.
Johnson will become the latest British leader to come to India to launch rhetoric about the prospects for a tighter trade partnership. However, those hopes are often dashed.
Report No. 10 observes that over the past two decades, “the share of UK imports of India goods and services has decreased from 6% and 11% in 2000 to 1.3%, respectively. and 2.1% ”. UK is currently doing transactions more with Belgium rather than with India.
A person with knowledge of New Delhi’s position was skeptical that there would be a breakthrough: “We don’t see any flexibility from [the UK] on important issues for India – a full FTA seems far too far away at this stage ”.
The UK government believes Johnson’s visit is a rare opportunity for the Asian nation to re-look at its place in the world. Note 10 reads: “India is re-adjusting its China policy and wants to pursue deeper commercial relations with reliable partners like the UK”.
But when Johnson seeks a new commercial relationship with India, some Western firms argue that Modi’s government is disrespecting. existing commercial deals.
Vodafone, one of Britain’s biggest companies, entered the Indian market in 2007 but was drawn into a complicated dispute with the country’s tax authorities, requires 3 billion euros in return.
An international tribunal of arbitration ruled in favor of Vodafone last year, but New Delhi appealed the decision in February.
Devas, a satellite company based in India and the United States, was also drawn into a tense legal dispute with the Indian authorities over a 2005 contract with Antrix, the commercial arm of the military agency. pillar of India.
Last year, Devas was awarded a settlement worth $ 1.2 billion, but their Indian unit was later issued a winding order by Indian regulators after allegedly a “fake” company.
David Davis, a former UK Cabinet Secretary, said Johnson should emphasize the importance of New Delhi playing by international rules. “The Indian government’s willingness to ignore the court’s rulings will only harm their national interests,” he said.
Under the Downing Street trade plan, Johnson will announce in Delhi its intention to negotiate a comprehensive FTA, with talks starting in the fall and a temporary deal with tariff reductions for both sides to enter. March 2022.
An “enhanced trade partnership” will aim to achieve an “early victory” by cutting tariffs before a full FTA, listing taxes on ‘whiskeys (150%) and vehicles ( 125%) ”were the areas with“ strong offensive interest for the UK ”.
However, note that this could be considered at the World Trade Organization, which stipulates that bilateral tariff reductions can only be agreed upon as part of credible plans for A full FTA includes “essentially all trade”.
Harsh Pant, director at the Observer Research Foundation of New Delhi, said India is not known for signing trade deals but added: “What has changed in India is there is merit. received from Covid-19 that you must make your supply chain flexible and reduce your dependence on China ”.
A UK government spokesman said: “We are not commenting on the leak. The UK is building a deeper trade and investment partnership with India that will help both countries build a better return after the pandemic. Trade between the UK and India is worth £ 18.3 billion by 2020.