UK General Election: India FTA a Manifesto Priority for Both Major Parties

As the UK approaches Thursday's general election, a significant free trade agreement (FTA) with India remains a priority for both the Conservative and Labour parties. Despite ongoing efforts, negotiations have stalled in the fourteenth round due to India's phased general election and Britain's political changes.

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Conservative Party's Vision

The Conservative Party manifesto outlines a commitment to finalising an FTA with India, alongside deeper strategic partnerships in technology and defence. "We will finalise a free trade agreement with India, alongside a deeper strategic partnership on technology and defence," it states. The manifesto also highlights the goal of reducing tariffs on Scotch whisky through these discussions.

Labour Party's Stance

Labour has criticised the Conservatives for missing their Diwali 2022 deadline for the FTA. David Lammy, Labour’s shadow foreign secretary, emphasised this at the India Global Forum in London. "Many Diwalis have come and gone without a trade deal and too many businesses have been left waiting," he said. Labour's manifesto echoes this sentiment, aiming for a new strategic partnership with India that includes an FTA and cooperation in security, education, technology, and climate change.

Challenges and Recommendations

Lord Christopher Fox, a Liberal Democrat peer, has highlighted "clear stumbling blocks" in achieving an FTA. The UK-India Business Council (UKIBC) also stresses the importance of concluding the FTA promptly. "Concluding the FTA promptly should be a priority for the UK government," it notes. The council believes that a successful agreement would boost economic growth, productivity, and private sector investment in the UK.

Indian High Commissioner to the UK Vikram Doraiswami mentioned that an FTA with the UK is among Prime Minister Narendra Modi-led government’s top priorities. He noted that Delhi had made an "unprecedented offer" to facilitate this agreement. "What we're trying to do with this free trade agreement is to increase the depth or the extent of ambition, including in goods and services, that we'd like to offer to the UK," he said at the IGF summit.

The UK aims to reduce tariffs on its exports significantly, while India seeks fair rules for Indian workers temporarily transferred to the UK on business visas. Doraiswami clarified that visas are not India's primary focus in these negotiations. "Visas are not the first priority for us in an FTA," he stated. Instead, India seeks reasonable terms within international trade frameworks for intercompany transfers.

The Conservative Party's manifesto also mentions pressing for permanent removal of tariffs on Scotch whisky with the US government and achieving significant tariff reductions in India through FTA discussions. This aligns with their broader strategy of enhancing bilateral trade relations.

Meanwhile, Labour is ready to finalise the FTA swiftly if they come into power. Lammy conveyed this readiness directly to Indian Finance Minister Nirmala Sitharaman and Trade Minister Piyush Goyal during his address at the IGF summit.

The UKIBC has released its own set of recommendations for strengthening UK-India relations ahead of the polls. It suggests prioritising the completion and ratification of a mutually beneficial FTA. "We recommend that the UK government prioritises completion of the negotiations and ratification of a win-win UK-India FTA," it states.

Political turmoil in Britain has impacted these negotiations since they began in January 2022 under Boris Johnson’s premiership. The subsequent short-lived leadership of Liz Truss and Rishi Sunak’s tenure as Britain’s first Prime Minister of Indian heritage have added complexity to these talks.

Both countries recognise that finalising this agreement could lead to higher economic growth and better productivity. It would also strengthen trust and cooperation in areas like defence, security, and climate change.

The Labour Party remains focused on getting the FTA over the line after what they see as delays by the Conservatives. Their manifesto pledges deeper cooperation with India across various sectors alongside securing an FTA.

In summary, both major UK political parties are committed to securing an FTA with India despite existing challenges. They aim to enhance bilateral trade relations significantly while addressing key concerns such as tariff reductions and fair rules for business visas.