India and the UK are far apart on a free trade deal. Indian sources stated that disparities in tariff lines and investment protection laws prevent free trade discussions between India and Britain from progressing under Prime Minister Narendra Modi’s second term, which ends next year.

A government official with direct information claimed the two nations could not agree on concessions on India’s car and liquor import levies.
According to a second government official, Britain wants India to agree to significant investment-protection safeguards in the deal or a parallel investment treaty.

“Britain has insisted on investor protection if it were to proceed with a final deal,” said the individual directly involved in the talks.

New Delhi wants to export more, while the UK wants more access to its whisky, luxury automobiles, and legal services.

After signing an interim trade accord with Australia last year, India would sign its first developed country trade deal with the UK. Modi must boost India’s business-friendly image before next year’s national elections.

However, Britain’s Indo-Pacific foreign policy bent prioritizes an agreement with India to strengthen ties with the region’s fast-growing economies.

The second government source directly involved stated Britain’s request that its corporations be permitted to seek international arbitration without resorting to Indian courts is the key disagreement on investment protection rules.

A third senior government official said the Indian government would not approve of this change from India’s current law that requires corporations to exhaust local remedies first.

“November was another soft deadline. However, this appears unlikely until next year. “Maybe after the Indian general elections,” a fourth government official told Reuters.

Next year, India’s Modi will seek a rare third term, while Britain’s Rishi Sunak will face a tough electoral test after a turbulent Conservative Party term.

By April, the countries had not finished discussing more chapters than in December. Nevertheless, they’ve agreed on 13 of the pact’s 26 chapters.

Two sources claimed the two countries ruled out a temporary pact.

Since trade pact negotiations are private, officials talked to Reuters anonymously.

India’s commerce, finance, and external affairs ministries declined to comment.

UK Department of Business and Trade officials stated the two countries are “committed to working towards the best deal possible for both sides.”

“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 economy,” the source added.

Sunak prioritizes quality over haste, unlike Boris Johnson, who, as prime minister, set a Diwali deadline last October for a deal that was missed under his successor Liz Truss.