FTA talks: Investment treaty to figure prominently during UK's high-level team visit to India this week
India has proposed to first utilise all local judicial remedies for settlement of disputes before initiating an international arbitration.
Issues pertaining to the proposed bilateral investment treaty being negotiated between India and the UK along with a free trade agreement will figure prominently during the visit of a high-level team from Britain here, an official said. UK Secretary of State for Business and Trade Kemi Badenoch and Director General for Trade Negotiations at the Department for Business and Trade (DBT) Amanda Brooks are visiting India this week. Besides participating in the G20 Trade and Investment Ministerial Meeting in Jaipur on August 24-25, the UK minister will hold bilateral talks with Commerce and Industry Minister Piyush Goyal on August 26 here and review the progress of talks on the free trade agreement.
The UK minister is also expected to meet Finance Minister Nirmala Sitharaman on various issues, including the bilateral investment treaty. Brooks would also meet senior officials of the Department of economic affairs in the finance ministry, which is leading the negotiations on the investment treaty. These meetings assume significance as negotiations for the free trade agreement have reached a final stage. The investment treaty is being negotiated as a separate agreement between India and the UK and the two countries are looking at signing both agreements simultaneously.
Though talks for most of the chapters have been closed, both sides have intensified negotiations to iron out differences on issues including rules of origin, intellectual property rights and the investment pact.
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Sources said that at present the investment treaty is a hurdle in the conclusion of both the agreements simultaneously, however, negotiations are going on to bridge the differences. These investment treaties help in promoting and protecting investments in each other's countries. The main point of contention involved in this pact is about the mechanism for the settlement of disputes. India has proposed to first utilise all local judicial remedies for settlement of disputes before initiating an international arbitration.
India has earlier lost two international arbitration cases against British telecom giant Vodafone and Cairn Energy plc of the UK over the retrospective levy of taxes. On automobiles and whiskey, an important demand of the UK, India has agreed to give duty concessions to British industry. Popular British whiskey brands include Johnnie Walker, Black Label and Chivas Regal.
To provide duty concessions in the automobile sector, several rounds of consultations have been held with the domestic players in India. According to an expert, the UK-based auto makers like JLR, Bentley, Rolls-Royce, and Aston Martin, cater to the luxury segment, while Indian manufacturers are mostly in the mass segment.
The 12th round of talks between India and the UK is in progress here. Out of the total 26 chapters in the proposed FTA, 19 have been closed. Investment is being negotiated as a separate agreement (bilateral investment treaty) between India and the UK.
The Indian industry is demanding greater access for its skilled professionals from sectors like IT, and healthcare in the UK market, besides market access for several goods at nil customs duties.
On the other hand, the UK is seeking a significant cut in import duties on goods such as scotch whiskey, automobiles, lamb meat, and certain confectionary items. Britain is also looking for more opportunities for UK services in Indian markets in segments such as telecommunications, legal and financial services like banking. The bilateral trade between the countries increased to USD 20.36 billion in 2022-23 from USD 17.5 billion in 2021-22.