India is seeking an exemption from the proposed carbon tax by the UK as part of ongoing talks aimed at finalizing a free trade agreement before the UK election. The Indian negotiating team has been in London this week for surprise discussions to address remaining obstacles to reaching an agreement. Rishi Sunak is keen to conclude the trade deal and had initially aimed for its completion last month.
India is strategically using the limited time before a general election in the UK as leverage in the negotiations. According to a UK government official, Indian negotiators argue that they have five years to plan ahead, whereas the current UK government has only five months left.
These negotiations coincide with India’s upcoming six-week general election campaign set to begin on Friday. Polls in India indicate that Narendra Modi‘s Bharatiya Janata Party is likely to win for the third consecutive time, while UK polls suggest a potential defeat for Sunak’s Conservative Party.
On Monday, India’s commerce minister mentioned that there are very few outstanding issues, indicating that a deal is nearing finalization.
In the talks, India is pushing for an exemption from the UK’s planned carbon border adjustment mechanism ( CBAM ) due to its status as a developing nation. This has been a point of contention, especially concerning the impact on Indian steel exporters to the UK.
However, exempting India from such a carbon tax could spark controversy, as the tax is intended to reduce emissions and support UK steel producers by ensuring fair competition with countries having lower or no carbon levies.
The ongoing negotiations mark the 14th formal round between the UK and India. Despite being declared closed last month, the round was kept open at India’s request, leading to the current discussions. Apart from the carbon tax issue, India is also seeking concessions on visas for Indian workers and a social security agreement, long-standing matters in these negotiations.
The talks in London are scheduled to conclude on Friday, with the possibility of continuing remotely next week. Both countries are working towards a mutually beneficial trade deal, with the UK in the best interests of its citizens and economy in the negotiations.
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