Officials say given that information technology and related professional services are by far the largest export from India to the UK, and with Britain being the second largest market for the industry, New Delhi's position on a deal is firmly based on securing services concessions. "India has asked for more discussions both on the movement of natural persons such as independent professionals (called Mode 4 services trade) and Mode 1, the cross border supply of services," sources in the know said.
With the US increasingly restricting it's H-1B visa policy, New Delhi wants the UK to provide an alternative choice for Indian services professionals. With London officially trying to streamline their visa policy and make it easier to attract highly educated workers, India is the obvious choice, an official said. In the long run, having a bilateral social security
agreement to ensure social security
are not subject to double payment may also be approached, he added.
The basic framework of a possible deal has been created by the UK-India Joint Economic Trade Committee (JETCO) at the end of July, earlier this year. The body had decided upon three priority sectors — food and drink, life sciences and health care, and digital and data services — as key areas of negotiation. The UK side has focused on market access issues, insisting on greater access for high value British goods, and greater ease of doing business through easier approvals fro British projects and businesses in India.
According to the UK-India Business Council's annual Doing Business in India report, legal and regulatory impediments have been pointed out as the top barriers to doing business in India. Most businesses have also cited improvements in the bureaucratic processes as the most desired reform.
On the tariff front, India has suggested that both sides soon exchange a list of 40-50 items on which they are willing to remove duties. Initial reactions from the British side show that London wants lower duties for its marquee products such as scotch whiskey, automobiles, medical equipment and engineering products.
The UK has batted hard for its alcohol products given that the US imposed a steep 25 per cent higher tariff on single malt Scotch and other whiskies from the EU, which included the UK, since October, 2019. In August, earlier this year, Washington DC extended the hike. While the UK government is now negotiating a hard bargain with the Donald Trump administration in the post Brexit phase, talks have hit a wall.
At this juncture, India has seized this opportunity to offer the UK lower duties on alcohol, a suggestion which came from Commerce and Industry Minister Piyush Goyal. However, other items on which lower duties are being demanded by the UK may be more difficult to negotiate. Tariff discussions on the same categories of items had been major points of contention in India's existing negotiations with the European Union on the proposed Broad-based Trade and Investment Agreement (BTIA). Being discussed since 2007, the BTIA has seen 16 formal rounds of talks till now, but has hit a wall over import duties.