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Liquor Tariffs On The Table As New Round Of Uk Fta Talks Begins



The third round of India-UK free trade agreement talks starts on Monday in New Delhi with a focus on resolving key issues, notably the demands that India cut its tariff on alcoholic beverages and processed food, and the UK allow more Indian professionals to live and work in that country.

The two sides aim to close the deal by October.

India and the UK have covered significant ground in the last two rounds, with the UK agreeing to eliminate duty on Indian rice and textile goods, while India is set to allow the duty-free entry of British apples, medical devices, and machinery, according to officials familiar with the discussions.

During his two-day India visit last week, British prime minister Boris Johnson said the deal could double India-UK bilateral trade to about $100 billion by 2030. The interim or early harvest agreement pact aims to cover 65% of goods and up to 40% of services, with the coverage in goods expected to go up to 90% in the full agreement.

Consensus has also been reached on mutual recognition of higher education qualifications, another person aware of the development said. During the two rounds of the trade negotiations that began in January this year, India and the UK have managed to close four out of 26 chapters in the FTA.

Queries to the ministry of commerce and industry and the British high commission in New Delhi remained unanswered till press time.

“India is looking to get greater access for its professionals in the services sector in the UK. India has some ambitions under the movement of natural persons. We are looking for movement of professionals such as nurses and other professions for delivery of service,” the official said.

Johnson has already expressed his support for more visas for skilled Indians, stating that the UK currently faces a shortage of experts in information technology and programming sectors.

“The UK is a services-driven economy, and India also has a good amount of interest in services. Both countries already have discussed…nurses, seafarers …recognition in the certificate of competency so once an eligibility criterion is aligned, they can go and work temporarily,” the official added.

Arpita Mukherjee, an economist at think tank ICRIER, said sectors like alcoholic beverages, dairy, processed food, fishery, meat, livestock genetics and animal feed and nutrition are likely to be discussed while under non-agricultural market access, engineering products, aerospace components, automobiles, and auto parts are some interest areas for the UK.

“The FTA should have a provision for reduction in tariffs on bulk imports and intermediate goods to support Make in India and value addition in India. In services, the discussion should go beyond Mode 4 to remove other impediments to trade, especially those related to Modes 1 and 2,” Mukherjee said. Mode 4 refers to the presence of a citizen of a country in the territory of another.

People aware of the development said visas are a sensitive issue for the UK, as was shown by Brexit.

“Brexit was based on the immigration issue. They have had bad experiences. The UK has developed a points-based visa system to attract talent. That aspect of the visa is certainly open,” another person aware of the development said. Explaining the role of Brexit on the India-UK FTA, another official said that new opportunities have emerged after Brexit.

“There was a huge amount of complementarities in both economies. But the UK was not an independent member, and therefore there was a lot of untapped potential for a trade deal. For instance, the UK is one of the largest investors in India. Many students choose the UK for higher studies. A huge Indian diaspora is present,” the official added.

The India-UK FTA deal is set to give a boost to the domestic textile sectors. Exporters said the UK is among the most important markets for them. India was in a disadvantageous position as it had lost duty-free access in several countries and was facing stiff competition from Bangladesh, Sri Lanka and Cambodia.

A sticky issue in the third round of talks is expected to be the demand for a cut in India’s 150% tariff on Scotch whisky.

“UK asks for a three-year maturation for whiskies. We don’t mature to that extent due to the warmer climate. They should create a different category called Indian whisky, which is not ‘aged’ in view of the technical reason,” said Vinod Giri, director general, Confederation of Indian Alcoholic Beverage Companies.

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