India has ramped up discussions with the UK, aiming to secure an exemption from the UK's planned carbon tax to facilitate the finalization of a free trade deal before the upcoming UK election. The negotiation process, happening amidst India's pending general election campaign, is vital for Rishi Sunak's government as they work towards concluding the agreement within a limited timeframe.
During talks held in London, the Indian negotiating team has stressed the urgency of reaching an agreement before the UK election, leveraging the time constraints to advance their priorities. The negotiations coincide with India's general election campaign, where the Bharatiya Janata party, led by Narendra Modi, is anticipated to secure a third consecutive victory. India's commerce minister has mentioned progress in the negotiations while highlighting a sticking point surrounding India's request for exemption from the UK's carbon border adjustment mechanism (CBAM), citing concerns about the impact on its steel exporters due to its developing country status.
The proposed exemption for India has stirred controversy as the CBAM is designed to reduce emissions and support UK steel producers by ensuring fair competition. Granting India an exemption could potentially undermine the effectiveness of the carbon tax and draw criticism for showing favoritism towards specific trading partners. The ongoing discussions follow the 14th formal round of negotiations between the UK and India, addressing crucial issues like visa concessions for Indian workers and a social security agreement that are part of India's agenda.
Both the UK and India are known for being tough negotiators in trade agreements, with the current negotiations posing challenges to reaching a deal that satisfies both parties' interests. Despite the complexities involved, both sides are committed to securing a comprehensive and ambitious trade agreement that aligns with their respective interests, fostering economic cooperation and growth. The Department for Business and Trade has reiterated its dedication to achieving a balanced agreement but clarified that immigration policies will not be altered as part of the trade deal negotiations.