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India Seeks Exemption from UK Carbon Tax in Free Trade Deal Talks

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India has intensified negotiations with the UK, seeking exemption from the UK’s planned carbon tax as part of efforts to secure a free trade deal before the UK election.

The discussions, occurring amidst India’s impending general election campaign, are crucial for Rishi Sunak’s government, which aims to finalize the agreement despite time constraints.

The Indian negotiating team, in talks held this week in London, has emphasized the urgency of reaching an agreement before the UK election. With time running short, India has leveraged the limited timeframe to advance its priorities in the negotiations. The talks coincide with India’s general election campaign, where the Bharatiya Janata party, led by Narendra Modi, is expected to secure a third consecutive victory.

India’s commerce minister has indicated progress in the negotiations, suggesting that a deal is nearing completion. However, India’s request for exemption from the UK’s carbon border adjustment mechanism (CBAM) has emerged as a significant sticking point. India argues for exemption on the basis of its status as a developing country, raising concerns about the impact of the CBAM on its steel exporters.

The proposed exemption has raised controversy, as the CBAM is intended to curb emissions and support UK steel producers by ensuring a level playing field. Granting India an exemption could undermine the effectiveness of the carbon tax and face criticism for favoring certain trading partners.

The ongoing discussions follow the 14th formal round of negotiations between the UK and India, which remained open at India’s request despite the commencement of its election campaign. Key issues such as visa concessions for Indian workers and a social security agreement have also been on India’s agenda.

India’s reputation as a tough negotiator in trade agreements underscores the challenges faced by the UK in reaching a mutually beneficial deal. Despite the complexity of the negotiations, both sides remain committed to securing an ambitious trade agreement that aligns with their respective interests.

While the negotiations continue, the Department for Business and Trade has reiterated its commitment to achieving a fair and balanced agreement that serves the best interests of both countries. However, there are no plans to amend immigration policies as part of the trade deal negotiations.

As discussions progress, both the UK and India are striving to address outstanding issues and finalize a comprehensive trade deal that fosters economic cooperation and growth.