Truss's resignation as British PM adds to uncertainty over India-UK FTA

The political crisis in London has added to the uncertainty over the proposed India-UK Free Trade Agreement with New Delhi not seeing any possibility of bringing the derailed negotiations back on track any time soon.

As Liz Truss on Thursday announced her resignation from the office of the British Prime Minister, the officials in New Delhi said that it would be difficult to end the stalemate in negotiations for the India-UK FTA in near future.

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Truss’s resignation triggered speculation about the possibility of her predecessor Boris Johnson’s return to the office of the British Prime Minister or of Rishi Sunak, the former Finance Minister and her rival in the race to the top job, succeeding her.

Johnson had not only played the key role in launching the negotiations for the India-UK FTA, but had also joined Prime Minister Narendra Modi in New Delhi on April 21 and 22 to set the Diwali (October 24) as the deadline for finalizing the deal. Sunak too had extended his support to the proposed India-UK FTA.

An official in New Delhi, however, said that even if Johnson or Sunak succeeded Truss, it might not be possible to end the impasse in the negotiations for the deal before the end of the year.

Jeremy Hunt, the Chancellor of the UK, is also among the probables, who could take over as the next British Prime Minister. He has also been known as a supporter of the proposed India-UK trade agreement. Penny Mordaunt, a former British Defence Secretary, is also believed to be among the contenders for the top job in the UK.

New Delhi and London had last week indicated that it would not be possible to meet the October 24 deadline. The proposal for Modi’s visit to London to join Truss to witness the signing of the agreement had also been shelved.

Truss, however, had tried to salvage the deal, which had come under a shadow after her Home Secretary Suella Braverman, had expressed “concerns” and “reservation” over the possibility of the proposed trade agreement opening up doors for increased immigration from India to the UK.

Braverman too resigned ahead of Truss.

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The officials said that Truss had cared little for protocols and directly be in touch with Commerce Minister Piyush Goyal earlier this month to make an informal attempt to end the impasse in negotiation for the FTA.

The exchanges between Truss and Goyal, however, could not result in a breakthrough.

London’s opposition to data localisation requirements of India and its demand for New Delhi to allow companies based in the UK to bid for government contracts in India had also contributed to the impasse in the negotiations for the trade deal. What had also led to a gridlock in negotiations is India’s insistence on greater market access in the UK for its companies offering services, particularly in the Information Technology and healthcare sectors. New Delhi had made it clear that it could commit to lowering tariff on whiskey exported to India only when London would accept its demand for concession for its services industry and for a liberal visa regime to facilitate travel of its skilled professionals to the UK. The UK had also demanded market access for its legal and accounting services companies in India.

New Delhi is also concerned about the fate of the FTA as the fear of imminent recession might trigger protectionism tendencies in the UK.