UK Prime Minister Rishi Sunak is set to make history by becoming the first British Prime Minister with Indian roots to visit New Delhi on this weekend. He will be attending the G20 Leaders' Summit scheduled for September 9-10 and meet Indian Prime Minister Narendra Modi.
This visit marks his inaugural trip to India as the Prime Minister of the United Kingdom, although several members of his Cabinet have recently travelled to India for Free Trade Agreement (FTA) negotiations.
A twelfth round of negotiations for the UK-India Free Trade Agreement (FTA) took place from 8-31 August. As with previous rounds, this was conducted in a hybrid fashion - a number of UK officials travelled to Delhi for negotiations and others attended virtually. This approach comes after they missed their ambitious Diwali target date for finalising the agreement last year.
Sunak dismisses the possibility of a quick trade deal
The UK Prime Minister, Rishi Sunak, has officially dismissed the possibility of a quick trade deal with India before the upcoming G20 summit in New Delhi later this week. In fact, within the administration, there's growing scepticism that these negotiations will reach a conclusion even before the general elections scheduled for next year.
Speaking to Asian Voice at an EXCLUSIVE interview in August 2023, Mr Sunak said that he was looking forward to visiting India as a representation of the UK’s 1.7 million ‘living bridge’. “I am always excited to visit India, particularly in this the way that you describe (first British Indian PM of the UK) will be special,” said the PM. “And I'm a representation of a living bridge between our two countries. So, it will be a particularly memorable moment and meaningful to me personally.”
Speaking about FTA he told Asian Voice, “I've had very good conversations with Prime Minister Modi, about our shared commitment, conclude, you know, a good FTA. I have always said with all FTAs, that I don't want to put arbitrary deadlines on them, because we should focus more on the quality than rush things, for the sake of it, that both you and I are committed to it. We look forward to the teams that are talking, and we look forward to making progress.”
Given that both the UK and India are gearing up for general elections in the coming year, many anticipate that serious trade deal discussions will only commence after these elections. Consequently, numerous officials within the UK government are now advocating for the removal of any fixed deadlines for concluding the deal.
Deadline removed
A government source, as reported by The Guardian, mentioned, "Last year, there was talk of finalising a deal by Diwali, but that was contingent on it being a shallow agreement cantered around a limited range of goods. Kemi Badenoch, the Trade Secretary, and Rishi Sunak have opted for a different approach and have thus removed the deadline."
Another high-ranking source within the UK government expressed concerns, stating, "India is eager to establish an early agreement on goods, but the risk lies in it potentially becoming the final outcome instead of being the foundation for a broader trade deal that includes the more vital aspects the UK desires."
Insiders familiar with the negotiations have hinted at specific agreements in certain areas. Recent reports indicated India's willingness to reduce tariffs on scotch whisky by a third (from 100 per cent) in exchange for tax incentives for Indian workers in the UK. However, precise figures have yet to be finalised, according to British officials.
Trade Secretary puts India under the spot
India must undertake "additional measures" to align with the UK's significantly more open economy during their negotiations for a free trade agreement (FTA), according to Kemi Badenoch, the UK's Secretary of State for Business and Trade. Badenoch, who recently visited India for a G20 trade and investment summit in Jaipur and FTA discussions, emphasised that this unique agreement would establish a precedent.
She acknowledged that the UK possesses a relatively open economy compared to India, implying that concessions and adjustments would be required on the Indian side to attain full equivalence with the UK. Her primary goal was to ensure that any resulting FTA would not diminish the current opportunities available.
Reports suggest that these partial agreements could have paved the way for the signing of a simplified trade deal this week. However, Sunak and Secretary of State for Business and Trade, Kemi Badenoch, have rejected this notion, fearing that it might impede the prospects of a more comprehensive agreement.
With this, the possibility of Indian PM Narendra Modi visiting the UK to close the FTA around Diwali becomes feeble and in fact, it’s not Sunak’s turn to show what he can do for India within the FTA to not just close the deal, but also strengthen the ties of Living Bridge without putting his homeland under a spot.
Russia and China to skip G20
Confirmed attendees among world leaders for the upcoming G20 summit include US President Joe Biden and Canadian Prime Minister Justin Trudeau. Notably absent will be Russian President Vladimir Putin and his Chinese counterpart, Xi Jinping, both opting to skip the event. French President Emmanuel Macron is likely to participate and engage in bilateral talks with Prime Minister Modi, as reported by Indian media. German Chancellor Olaf Scholz emphasised the significance of the G20 summit, despite the absence of Russia and China.
Key topics on the agenda this year, under India's year-long presidency, include increased loans to developing nations from multilateral institutions, reforms to international debt structures, cryptocurrency regulations, and addressing the impact of geopolitical uncertainties on global food and energy security.
Notably, the bloc has struggled to issue joint statements this year, with deep divisions over language pertaining to the Ukraine conflict. While Russia and China oppose blaming Moscow for the war, Western countries such as the United States, UK, France, and Canada insist on strong condemnation as a prerequisite for a unified statement.
The prospect of a joint communique appears dim. Russia and China have blocked these binding agreements at all major G20 meetings so far, objecting to language referring to the Ukraine crisis. The lack of consensus may undercut India’s efforts in using the G20 presidency to burnish its global credentials and ambitions.
