More Stories

Informist, Wednesday, Oct. 16, 2024

 

--Govt source: India-UK trade talks likely to resume in Nov 

--Govt: Carbon Border Adjustment Mechanism issue won't impact EU trade talks 

 

NEW DELHI – After facing multiple snags, the commerce ministry is likely to begin discussions with the UK on their proposed Free Trade Agreement in November, a ministry official said. The trade pact was originally slated to be signed by Diwali 2022.

 

"The UK government is currently caught up in the preparation of their Budget, which will be presented around the end of October. So, we are hopeful that trade agreement negotiations will begin after that," the official said, on the condition of anonymity. 

 

The discussions have been on hold for half a year after the two countries stepped into their respective election cycles. There have been 14 rounds of negotiations so far, with the last one held in April in London.

 

India and the UK began negotiations over a Free Trade Agreement in January 2022 when Boris Johnson was prime minister. While a deadline of October 2022 was initially set to coincide with Diwali, political developments in the UK delayed the conclusion of discussions. Prime Minister Narendra Modi, senior ministers as well as top government officials have said on several occasions that discussions with UK officials were on track, with the new Labour government eager to conclude the deal.

 

On the other hand, India is also negotiating a trade pact with the European Union which has a contentious clause--the Carbon Border Adjustment Mechanism. Commerce Ministry Secretary Sunil Barthwal said Wednesday that though the Indian government is against the EU's Carbon Border Adjustment Mechanism, or carbon tax, it should not deter the signing of the free trade agreement. 

 

"This is just one point where we have disagreements, but free trade agreements have wider discussions, so we are hopeful we will be able to close it," Barthwal told Informist. 

 

To mitigate the risks of climate change, the EU announced a phased implementation of the Carbon Border Adjustment Mechanism in October last year. Under this, those exporting goods to the EU have to report the carbon content of the commodity, based on which, they would be taxed. The carbon tax collection is expected to begin from 2026.

 

Ministers – including Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal – have dissented against it staunchly and have been making a case for an exemption from this mechanism, which India considers protectionist and a trade barrier. Last week, Sitharaman said that it is a border tax introduced by a bloc as per its own convenience and was unsure if it was World Trade Organization-compliant. 

 

The decision by the EU may affect the profitability of Indian exporters, as Europe is amongst the top export destinations for the country. India's total trade with the EU was $137.41 billion in 2023-24 (Apr-Mar), with imports at $61.48 billion and exports at $75.93 billion.  End

 

US$1 = INR 84.00

 

Reported by Priyasmita Dutta

Edited by Vandana Hingorani

 

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.