India-UK FTA in Final Stage: Visas, Tariffs and Carbon Tax
Why in the news
Commerce Minister Piyush Goyal met Jonathan Reynolds in London to push through the long-pending India-UK Free Trade Agreement. Talks were described as conclusive, with only a few issues left.
Key facts
- Open issues: rules of origin and short-term service visas.
- India scaled back its visa demands; the UK would offer just about 100 new service-sector visas a year, well below India’s initial plan for healthcare and IT workers.
- Indian whisky makers want the UK’s three-year maturation rule relaxed.
Trade-offs
| Side | Wants |
|---|---|
| India | Better UK access for textiles and services; textile exports face up to 10% UK tariffs, so an FTA would level the field with rivals such as Bangladesh |
| UK | Lower Indian tariffs on cars (now 100%), Scotch whisky and wines (150%) |
Economic impact
- GTRI says gains for India are limited because many exports already enjoy zero or low UK tariffs.
- Labour-intensive sectors such as textiles should gain significantly.
- UK exporters gain more: India’s average tariff on UK goods is 14.6% against 4.2%.
Carbon tax concern
- India is tracking the UK’s planned carbon tax, in line with the EU’s CBAM due in 2027.
- Steel, cement and aluminium exports could be hit.
Exam angle
- Ministers: Piyush Goyal and Jonathan Reynolds.
- Terms: rules of origin, CBAM, GTRI.