{"id":42784,"date":"2025-05-06T20:17:40","date_gmt":"2025-05-06T14:47:40","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=42784"},"modified":"2025-05-06T20:18:02","modified_gmt":"2025-05-06T14:48:02","slug":"indiauk-free-trade-agreement-fta-negotiations","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/06-05-2025\/indiauk-free-trade-agreement-fta-negotiations","title":{"rendered":"India\u2013UK Free Trade Agreement (FTA) Negotiations"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/ International Relations, GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The India\u2013UK Free Trade Agreement (FTA) negotiations have hit fresh hurdles, primarily due to the UK\u2019s proposed Carbon Border Adjustment Mechanism (CBAM) or carbon tax.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The India\u2013UK FTA negotiations were formally launched in <strong>2022,<\/strong> as part of efforts to deepen economic cooperation and boost bilateral trade.\u00a0<\/li>\n\n\n\n<li>As per data from <strong>FY 2023\u201324<\/strong>, the trade volume between the two countries reached <strong>$21.34 billion<\/strong>, an increase from <strong>$20.36 billion<\/strong> in the previous fiscal year.\u00a0<\/li>\n\n\n\n<li>Presently, goods exported from India to the UK face an average import duty of <strong>4.2%.\u00a0<\/strong><\/li>\n\n\n\n<li>The two sides are now aiming to conclude <strong>an FTA<\/strong>, a <strong>Bilateral Investment Treaty (BIT)<\/strong> and a social security agreement termed as the <strong>Double Contribution Convention Agreement (DCAA).<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Demands of India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has been pushing for greater market access for its products, particularly in labour-intensive sectors such as <strong>textiles, garments, gems, and jewellery.<\/strong><\/li>\n\n\n\n<li>India has called for liberalisation of the UK\u2019s visa regime to allow movement of skilled professionals from <strong>Information Technology (IT), IT-enabled services (ITeS), and healthcare sectors.<\/strong><\/li>\n\n\n\n<li>India has also demanded special provisions for <strong>Micro, Small and Medium Enterprises (MSMEs)<\/strong> and requested flexibility regarding carbon emission standards.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Demands of UK<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The United Kingdom is keen on reducing tariffs imposed by India on high-value items such as <strong>Scotch whisky, electric vehicles, chocolates, and lamb meat.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>It is also seeking market access in telecom, legal, insurance, financial services.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The UK is pressing for a <strong>sunset clause<\/strong> in the proposed Bilateral Investment Treaty and greater flexibility on issues like data localisation and the recognition of its new carbon tax regulations.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Carbon Border Adjustment Mechanism (CBAM)<\/strong><br>&#8211; It is a proposed environmental tax that aims to put a <strong>carbon price on certain goods imported<\/strong> into the United Kingdom, based on the carbon emissions generated during their production.\u00a0<br>&#8211; It is designed to<strong> level the playing field between domestic producers<\/strong> (who must comply with the UK&#8217;s strict climate regulations) and <strong>foreign exporters<\/strong> from countries with weaker or no carbon pricing mechanisms.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>CBAM and India\u2019s Concerns<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The UK\u2019s draft CBAM legislation, effective <strong>January 1, 2027<\/strong>, imposes levies on high-emission imports like cement, steel, aluminium, fertilisers, hydrogen.<\/li>\n\n\n\n<li>The emission calculation will follow the UK\u2019s domestic<strong> Emissions Trading Scheme.<\/strong><\/li>\n\n\n\n<li><strong>Indian concern: <\/strong>CBAM undermines the principle of<strong> Common But Differentiated Responsibilities (CBDR)<\/strong> in climate negotiations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Response to CBAM<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has proposed a <strong>\u201cRebalancing Mechanism,\u201d<\/strong> which would require the UK to compensate Indian industries for losses incurred due to the carbon tax.<\/li>\n\n\n\n<li>India has emphasised that its <strong>Carbon Credit Trading Scheme (CCTS),<\/strong> which is based on emission intensity rather than absolute emission levels, is more suitable for a developing economy.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To ensure that the FTA benefits are not undermined by non-tariff barriers like CBAM, India must negotiate firmly and strategically.\u00a0<\/li>\n\n\n\n<li>India must continue to advocate for the CBDR principle and push for differential treatment in climate-related trade measures.\u00a0<\/li>\n\n\n\n<li>Institutional mechanisms like the proposed rebalancing clause and <strong>effective dispute resolution frameworks<\/strong> must be built into the final agreement to protect the interests of both the parties.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/trade-deal-stalled-over-uk-carbon-tax-india-proposes-plan-for-rebalancing-9984730\/\" rel=\"nofollow noopener\" target=\"_blank\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The India\u2013UK Free Trade Agreement (FTA) negotiations have hit fresh hurdles, primarily due to the UK\u2019s proposed Carbon Border Adjustment Mechanism (CBAM) or carbon tax.<\/li>\n<p><\/p>\n<h3><strong>Background<\/strong><\/h3>\n<li class=\"ms-5\">The India\u2013UK FTA negotiations were formally launched in 2022, as part of efforts to deepen economic cooperation and boost bilateral trade.\u00a0<\/li>\n<li class=\"ms-5\">As per data from FY 2023\u201324, the trade volume between the two countries reached $21.34 billion, an increase from $20.36 billion in the previous fiscal year.\u00a0<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/06-05-2025\/indiauk-free-trade-agreement-fta-negotiations\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-42784","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/42784","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=42784"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/42784\/revisions"}],"predecessor-version":[{"id":42812,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/42784\/revisions\/42812"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=42784"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=42784"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=42784"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}