According to a UK media report on Sunday, data localisation and UK companies being allowed to bid for Indian government contracts is one of the issues that could cause a deadlock in the final stages of the India-UK Free Trade Agreement FTA negotiations towards a Diwali draft completion deadline.
According to a source close to the talks, data localisation rules that prevent foreign companies from India and allow UK firms to bid for public sector contracts are two key sticking points to a comprehensive deal, according to a source close to the talks.
The likelihood of a so-called thin trade deal being reached within the symbolic Diwali or October 24 deadline and further iterative deals at a later stage is now looking like a possible outcome.
The stumbling blocks are absolutely to do with digital. The newspaper quoted an insider as saying how ambitious and comprehensive this deal is in some way a function of time.
It follows UK Trade Secretary Kemi Badenoch stating earlier this week that just because there may be an FTA struck with India, it did not mean that we can't do more later. The Department for International Trade DIT also reiterated its government stance that any FTA would only be agreed if it meets the UK's interests.
A UK government spokesperson said this week that we will not sacrifice quality for speed and will only sign when we have a deal that meets the UK's interests.
UK Home Secretary Suella Braverman expressed reservations over India being offered some kind of open borders visa concessions after a week of controversial interventions that cast a shadow on the prospect of a wide-ranging bilateral trade agreement.
While India countered the minister's claims that a Migration and Mobility Partnership MMP between the two countries had not worked very well in tackling visa overstayers, strategic experts suggested that the wrangles may well end up in a diluted trade pact. At this stage, the prospect of Prime Minister Narendra Modi coming to the end of the month to sign off on an FTA draft around Diwali is also seen as shaky.
It appears that the prospective UK-India FTA under the Liz Truss government won't be as comprehensive as the previous Boris Johnson government, as negotiations on key issues of mobility migration and tariffs can be expected to continue towards a non-time bound second phase of the agreement, said Rahul Roy-Chaudhury, Senior Fellow for South Asia at the London-based International Institute for Strategic Studies IISS think tank.
The negotiations on key issues of mobility migration and tariffs can be expected to continue towards a non-time bound second phase of the agreement. It will allow both governments to claim political victory, even though it's economic impact may be underwhelming for both, he said.
The timeline for an FTA was announced by former prime minister Johnson during his visit to India in April. The governing Conservative Party in the UK has been thrown into turmoil and his embattled successor at Downing Street, Liz Truss, is believed to be very keen to score her big win by clinching a trade deal with one of the world's fastest growing economies, a process she had initiated as a former trade secretary.
The focus of the FTA negotiations is to reduce barriers to trade, reduce tariffs, and support easier imports and exports into each other's markets.
According to the UK government data, India-UK bilateral trade is currently at around GBP 24.3 billion a year and the aim is for that to be doubled by 2030.