India plans to stitch up FTA during its G20 presidency

The Indian government is looking to conclude at least one of several free trade agreements (FTAs) it is currently negotiating during the country’s G20 presidency, with planned trade deals with the UK and European Free Trade Association (EFTA) closest to being finalised, people familiar with the matter said on Wednesday.

Besides EFTA and the UK, India is engaged in negotiations on FTAs with the European Union (EU) and Canada. Talks are also underway with Australia to upgrade an existing trade deal to a comprehensive economic cooperation agreement (CECA). India and Sri Lanka agreed last month to resume talks on a planned Economic and Technology Cooperation Agreement.

Though India and EFTA members – Iceland, Liechtenstein, Norway and Switzerland – agreed to resume talks on a Trade and Economic Partnership Agreement (TEPA) only in April this year, negotiations have progressed very quickly due to a push from the political leadership on both sides, four people with knowledge of the discussions said requesting anonymity.

The two sides discussed core issues, such as trade in goods and services, rules of origin, intellectual property rights (IPR) and sustainable development, during meetings between July 3 and July 6, and there was broad consensus on many items in light of “high-level political involvement” in the process, one of the people said.

The 18th round of negotiations was path-breaking as it marked the resumption of formal talks after the previous round held in 2017. A second person said the tricky issues being tackled in the talks included tariffs, IPR and migration and mobility of students and professionals, which has emerged as a key ask from the Indian side in all FTA negotiations.

“The issue of trade balance with EFTA is also important,” a third person said. India’s total trade with the EFTA members in 2021-22 was $27.23 billion, with a deficit of more than $23.7 billion. The imbalance was mainly due to Switzerland’s exports of bullion and precious metals to India.

Though EFTA is a relatively small grouping, there is considerable interest in accessing cutting edge technologies developed by its members in areas such as waste management and green and renewable energy, the people said.

Negotiations on the India-UK FTA are also progressing at a fast pace, the people said. “After the successful conclusion of the 11th round of talks on July 18, the two sides are ready to discuss key matters in the 12th round next week,” the third person said. The talks expected to be held from August 7 will focus on seven remaining chapters out of the total of 26 chapters, he said.

The trade talks with the UK have been affected since last year by domestic political turbulence in Britain and differences between the two sides over violent protests by Khalistani elements in London and other British cities. There has been headway even on some contentious issues, such as the import of Scotch whisky and automobiles, and migration and mobility, but nothing can be described as settled until “all issues are resolved and a final agreement is reached”, a fourth person said.

India may accept concessional imports of only high-end whisky from the UK to protect the domestic liquor industry, provided it is a win-win for both sides, he said. Good quality Indian liquor must get access to the UK’s markets without any non-tariff barriers, he added.

As with other planned trade deals, India wants greater mobility for students, professionals and skilled workers in the UK as this is crucial for the growth of business between the two sides, the person said.

The people said the time frame of concluding one of the FTAs during India’s G20 presidency is not set in stone, though officials remain hopeful that at least one trade deal will be concluded by the year-end. They said the planned trade deal with the EU, which includes protracted talks on many complicated issues, is unlikely to be concluded so soon.

“It is very difficult to give any particular date for concluding FTA negotiations. But, based on the political will, it is expected that one of the two agreements could be concluded during India’s G20 presidency,” the second person said.

India assumed the presidency for one year from December 1, 2022 and is set to host the G20 Summit from September 9 to 10.