India-UK FTA Likely To Take Effect In A Year; Centre Mulls Alternatives to Foreign Carbon Tax: Sources
On environmental trade measures, the government has stated that India reserves the right to retaliate if the EU or UK implements carbon taxes.
The much-anticipated India-UK Free Trade Agreement is expected to come into force in about a year, according to government sources. The final text of the agreement will now undergo legal scrubbing, a process expected to take up to three months, before it is formally signed by both countries.
The legal vetting will be conducted jointly by India and the UK, after which the deal will be presented to the UK Parliament for ratification. This parliamentary process could take up to 12 months, and the FTA will only become effective once both legal and legislative steps are completed.
Meanwhile, the Bilateral Investment Treaty between India and the UK remains under negotiation. The Department of Economic Affairs under the Ministry of Finance is leading the discussions. “There is a lot of work happening,” a senior official said, but added that no firm timeline has been established yet for its conclusion.
On environmental trade measures, the government has stated that India reserves the right to retaliate if the EU or UK implements carbon taxes such as the Carbon Border Adjustment Mechanism. While CBAM currently impacts only a few product categories and is not seen as a significant monetary burden, the government expressed concern over the administrative load it places on Indian exporters.
Officials are also exploring domestic alternatives to foreign carbon taxes, such as green-certifying products within India and imposing a local tax to fund sustainability efforts, sources said. If needed, India can take steps to offset the impact of such measures on its exporters, they added.
