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Britain and India will this week intensify trade talks in a bid to remove “significant” barriers to a deal before Rishi Sunak, UK prime minister, and Narendra Modi, his Indian counterpart, meet in New Delhi next month.
Kemi Badenoch, UK trade secretary, will travel to India on Wednesday to try to give political impetus to the discussions, although British officials said there were still “some quite significant issues” to be resolved.
Britain hopes the deal will open up trade in whisky and cars to India as well as services and investment opportunities, while New Delhi wants better access for manufactured goods, services and work visas.
Officials and diplomats in India had speculated that talks on the proposed trade deal might be concluded before the G20 summit, hosted by Modi in Delhi on September 9-10.
Sunak, whose parents are of Indian descent, will hold bilateral talks with Modi on the margins of the summit and the prospect of a UK-India trade deal is seen as a significant goal by both sides.
However, British officials say there is little chance of a full trade deal being ready by next month and the best that it might be possible for the leaders to sign is an “agreement in principle”, a declaration of political intent.
Britain and Australia signed such an “agreement in principle” in June 2021 six months before a final trade deal was sealed. One UK government official said: “That’s not currently the plan, although this is a live negotiation.”
The UK-Australia deal was widely criticised by British MPs for being rushed and Badenoch has repeatedly stressed that she is not tied to any deadline in reaching an agreement with India.
Badenoch will fly to Jaipur for a meeting of G20 trade ministers before moving on to Delhi for bilateral talks with Piyush Goyal, minister of commerce and industry.
Boris Johnson, former UK prime minister, had previously promised in 2022 that a trade deal with India would be signed “by Diwali”, but that self-imposed October deadline came and went.
The UK Department for Business and Trade said: “The UK and India are committed to working towards the best deal possible for both sides. We’ve made good progress in closing chapters, and are now laser-focused on goods, services and investment.
“While we cannot comment on ongoing negotiations, we are clear that we will only sign when we have a deal that is fair, balanced and ultimately in the best interests of the British people and the economy.”
The UK government has calculated that a trade deal could increase the UK’s gross domestic product by “around £3.3bn in 2035” (in 2019 prices), equivalent to an increase in UK GDP of 0.12 per cent to 0.22 per cent.
Goyal wants to use the G20 event this week to move along India’s trade negotiations, and is planning to have discussions with the UK as well as the EU and Canada, with whom India is also discussing trade agreements.
An Indian government official said the talks with the UK had made progress, and India hoped the face-to-face meetings with ministers will allow them to tackle some of the outstanding issues.
“The political leadership has more flexibility in negotiation” than the trade teams, the official said. Goyal told the Financial Times last month that India has made “good offers” to the UK on cars and whisky.