India looks to finalise free trade pact with UK, seeks easier visa rules

New Delhi: India is looking forward to finalising the free trade pact with the UK but is pushing for easier visa rules for skilled workers hired by Indian companies investing in Britain. The pact is expected to double bilateral trade between India and the UK by 2030.

Officials of both nations are currently engaged in another round of talks. The meeting started on Monday and will last till the end of the week.

Indian companies are the second biggest investors in the UK. This is a factor in the Indian government's demand for hiring flexibility. Two people close to the matter told Bloomberg that this is in addition to India's call for more visas for Indian workers.

However, New Delhi is also aware of the UK administration's reluctance around visa demands. The talks of free trade between India and the UK have been going on for a long time. It was supposed to reach an end by October 2022. A clear solution has not been created even though it is long past the deadline. The business visa issue has been a key hurdle.

Longer-term work options for Indian students in the UK, a potential carbon tax on steel imports that Britain is considering, and rules of origin issues are likely to be discussed between Indian and British officials.

New Delhi has been seeking a more balanced social security system for immigrant workers in the UK. Currently, foreign nations in the UK including Indians pay a larger percentage of their income to tax. It will be less if they stay in the country for a longer period but current visa norms do not help with that. Indian students can stay in the UK for two years after their education is done. PhD students can stay for three years. New Delhi is pushing for a longer period of employment for these students.

"The UK has been clear in negotiations that trade and immigration are separate policy areas. We are discussing temporary business travel within the FTA to allow professionals to deliver services in each other's markets. However, a free trade agreement with India will not include commitments on immigration," said a spokesperson for the UK's business and trade department.

India's trade ministry has not responded to this comment.

The British government has been eyeing a trade deal with India for a long time. The Rishi Sunak administration wants to cut tariffs and create opportunities for UK services to operate in India. It is demanding lower import duties on automobiles and scotch whisky. In the last year, bilateral trade between India and the UK reached $20 billion and increased by over 16%.

New Delhi sees the free trade deal as a means to the goal of $2 trillion in exports by 2030. The Modi government also wants the UK to become a top choice for companies that are shifting supply chains from China.

The UK is the seventh largest buyer of Indian goods.