New Delhi: India is unlikely to allow unfettered access of electric vehicles (EVs) from the UK, one of the two key contentious issues resulting into a deadlock in the free trade negotiations even after 14 rounds of talks since January 2022, two people aware of the development said.
The other issue is related to India’s demand for easy business visas, they said, requesting anonymity. The UK is averse to facilitate India’s services trade by relaxing business mobility norms under the proposed pact, but it wants New Delhi to open up the vast Indian automobile market, particularly for EVs, they added.
“India has proposed some duty concessions in the automobile sector, provided London reciprocates on the Indian asks. But, it cannot open its EV market without giving due protection to domestic manufacturing as the sector is still at a nascent stage, and needs support,” one of them said.
India may extend limited concessions on EVs in line with the new e-vehicle policy unveiled on Friday, provided British auto makers commit investments in India, the second person said.
On Friday, the government notified a policy to promote India as an EV manufacturing destination by slashing duty on limited number of imports of such cars to 15% (from up to 100%), provided foreign automakers commit a minimum $500 million (around ₹4,150 crore) in three years and take up local value addition from 25% to 50% in five years.
India is the world’s third largest automobile market worth $151 billion ( ₹12.5 lakh crore) in 2023, according to official data. The sector is expected to cross $300 billion ( ₹24.9 lakh crore) by 2030.
EVs are the future, the second person said. “It is unlikely that the FTA route would be provided to any country to completely bypass the policy obligations such as minimum investment requirement in setting up a manufacturing plant in India and local value addition,” he added.
Although recent talks between Prime Minister Narendra Modi and his UK counterpart Rishi Sunak have brightened prospects of resolving differences, it will take more time, the first person said. On March 12, Modi had a telephonic conversation with Sunak and “assessed positively the progress made towards early conclusion of a mutually beneficial Free Trade Agreement,” a statement issued by the Prime Minister’s Office that day said.
While releasing trade data on Friday, commerce secretary Sunil Barthwal said India and the UK are “actively engaged” in the FTA negotiations. “Both sides are quite committed to the fact that there should be a commercially meaningful, fair, equitable, good deal between the two countries and sensitivities of both the countries should be respected, as well as strengths of both the countries should reflect in the trade deal,” he said.
While an FTA with Oman is possible soon, a deal with the UK is expected only after the general elections, another government official said. India on Saturday announced dates for the 2024 Lok Sabha polls that will be concluded on June 1 and ballots counted on June 4. “A trade deal is unlikely before the new government is formed in June as mutually agreeable solutions on key matters are still elusive,” he said.
“FTAs are meant to be mutually beneficial. India is willing to open its market for scotch and British automobiles while adequately protecting its industries. But these concessions will not be possible without easier mobility of Indian businesses in the UK,” the first person said. India sees potential for its services exports to Europe, which needs easier mobility of its professionals and businessmen, he added.
Indian industries were unwilling to offer tariff concessions on items like automobiles and liquor to British manufacturers without London allowing easier mobility for Indian professionals, HT reported on October 3, 2023. If business mobility, or easier temporary movement of Indian professionals to the UK for business purposes, is taken out of the FTA negotiations, there won’t be any significant gain for India as most Indian goods (more than 60% of the total merchandise) already have duty-free access to the British market, and most of the other items attract a low tariff of 5%, it said.
The negotiating teams were not in a position to conclude an agreement even as the round 14 closed on Friday, PTI news agency reported from London, citing British officials. “We anticipate that while some talks might happen between rounds, the next round of negotiations will take place after the Indian elections,” it quoted an official as saying.
