India-UK FTA: The Labour government may take a more aggressive approach on immigration and climate change
The country may take a more aggressive posture on issues including immigration, labor, the environment, and climate when the new Labour-led government in the UK plans to resume negotiations for the…
The country may take a more aggressive posture on issues including immigration, labor, the environment, and climate when the new Labour-led government in the UK plans to resume negotiations for the UK-India Free Trade Agreement early next year, according to several sources.According to a source close to the situation, the negotiations are expected to resume in January 2025 or shortly thereafter and may be extended since UK Prime Minister Keir Starmer's administration might not adhere to all of the agreements made by the previous Conservative government, businessline was informed. Even in places that are thought to be settled, more interactions could be required.
Terms of negotiation
“There is no doubt that the Starmer government wants an FTA with India but the terms of negotiations may be different than before, especially in particular areas, and it is likely to affect the negotiating positions of both sides on important issues such as work visas and the proposed Carbon Border Adjustment Mechanism (CBAM),” the source said.The UK may now be more resistant to India's desire for simpler work permits for its experts given the Labour government's harsh attitude on immigration. "The Conservative government may have been careful on work visa issues when it was negotiating the FTA with India, but the Labour government is going to be much tougher. Checking immigration and ensuring jobs for the UK people is a top priority and Starmer would not want to be seen as giving away job opportunities,”the source stated.Although it might be simpler to facilitate work visas for highly skilled occupations than for low-skilled ones, firms may still have to prove that they are doing enough to train locals so that they can also be eligible for these jobs. Following bilateral discussions with Modi at the last G20 meeting, Starmer released a statement saying, "A new trade deal with India will support jobs and prosperity in the UK — and represent a step forward in our mission to deliver growth and opportunity across our country."The two parties had aimed to boost bilateral commerce in products and services to an estimated $100 billion by 2030 through the successful implementation of the free trade agreement, which will cover both commodities and services. India's imports and exports to the UK totaled $8.41 billion and $12.9 billion, respectively, in 2022–2023.The Labour government will also prioritize environmental and climate-related issues, which could be a blow to India's aspirations of opposing the proposed CBAM. “India was hoping to convince the UK government to offer its flexibilities on CBAM as part of the FTA negotiations. The argument was that carbon taxes could negate the tariff concessions extended through the trade pact. The Labour government is expected to be stricter on the matter,” the official said.Early in 2022, the Conservative government, led by Prime Ministers Boris Johnson and Narendra Modi, began the UK-India Free Trade Agreement discussions. The first target for concluding the talks was Diwali in 2022.
