Whitehall officials have raised concerns about Boris Johnson’s October deadline for a UK-India trade deal, with suggestions the PM’s “freestyling” could mean a lighter agreement than originally hoped.
Johnson and Indian Prime Minister Narendra Modi agreed during an April meeting that there would be a “trade deal by Diwali”, which is on 24 October this year.
Trade department sources told City A.M. that it was a target imposed from above by Johnson and that it left negotiators little time to negotiate a comprehensive trade deal with a traditionally protectionist Indian government.
A senior Department for International Trade (DIT) source said “Boris’ freestyling has made things much more difficult than they needed to be”.
“He did this on more than one occasion on trade policy – like when he talked up the possibility of more Indian visas in Delhi – and we would have to pick up the pieces,” they said.
A deal with the Commonwealth country has been seen as a major prize for the UK post-Brexit, with negotiations formally launched by trade secretary Anne-Marie Trevelyan in January.
The UK government is hoping to get 150 per cent tariffs on British whisky and 125 per cent tariffs on British cars slashed, while also further opening up the Indian economy to UK services firms.
India has strict regulations which make it difficult for overseas services firms to operate at a large scale.
One trade department official said “we’ll probably have an agreement to announce by that deadline, but it just may not be as deep” as other post-Brexit deals signed by the UK.
A source close to Trevelyan said “we’re committed to working toward” the Diwali deadline.
Tory leadership frontrunner Liz Truss has not declared if she is in favour of meeting the Diwali deadline, however her record of signing speedy deals when trade secretary suggests she would likely stick with it.
Rishi Sunak, meanwhile, has been critical of the government’s trade policy and a source close to his campaign said “he will not rush into trade deals based on self-imposed targets”.
India has avoided signing trade deals during Modi’s tenure, however the Prime Minister inked a trade and economic agreement with Australia earlier this year.
The deal was widely considered to be “thin” in the Department for International Trade, but that it also signalled that India is becoming open to breaking down some of its trade barriers.
A DIT source said “there needs to be political will on both sides” for the UK to get a more comprehensive deal than the Australians managed.
Sam Lowe, trade expert at consulting firm Flint Global, said that “self-imposed deadlines can reduce a country’s negotiating leverage”.
“The fundamental issue in these negotiations is that India is only ever going to liberalise so much.”Sam Lowe
“The government is going to have to make a decision whether to do a deal by Diwali and lock in what it can or hold out for longer in the hope of getting slighter better access to the Indian market.”
A trade department spokesperson said: “India is projected to be the world’s third largest economy by 2050, and any improvements to our current trading arrangement could be game changing for UK businesses.
“The target agreed by both sides is to complete the majority of talks by the end of October, however we remain clear that we won’t sacrifice quality for speed.