India has ramped up talks with the UK to secure exemption from the planned UK carbon tax as part of efforts to solidify a free trade deal before the UK election. The negotiations are seen as critical for Rishi Sunak’s government to finalize the agreement despite time constraints and looming political events in both countries. Discussions have taken place in London this week, with the Indian negotiating team underlining the pressing need to reach an agreement before the UK election and using the limited timeframe to push forward their priorities in the negotiations.
The negotiations are taking place amidst India's general election campaign, where the Bharatiya Janata Party, led by Narendra Modi, is anticipated to secure a third consecutive term. India's commerce minister has conveyed optimism regarding progress in the negotiations, indicating that a deal may be nearing completion. However, a significant sticking point has emerged with India's request for exemption from the UK’s carbon border adjustment mechanism (CBAM), highlighting concerns about its impact on Indian steel exporters and asserting its developing country status to justify the exemption.
The proposed exemption from the CBAM has stirred controversy as it aims to curb emissions and support UK steel producers, ultimately creating a level playing field in the market. Granting India an exemption could potentially undermine the effectiveness of the carbon tax and raise criticism for showing favoritism towards certain trading partners. The ongoing discussions follow the 14th formal round of negotiations between the UK and India, reflecting India’s tough stance in trade negotiations and the challenges faced by the UK in reaching a mutually beneficial deal.
Despite the complexities involved, both countries are committed to securing a substantial trade agreement that aligns with their interests. The Department for Business and Trade has reaffirmed its dedication to achieving a fair and balanced deal that benefits both nations, while also clarifying that immigration policies are not part of the ongoing trade deal negotiations. Both the UK and India are aiming to address outstanding issues and finalize a comprehensive trade deal that promotes economic cooperation and growth.