Welcome to this final panel in today’s hearing on the India free trade agreement. Sir Chris Bryant, thank you very much indeed for joining us. Kate, thanks for making sure that he is safe. Minister, this must stick in the craw. You have been one of the strongest voices in this Parliament opposing Russian aggression in Ukraine. India is a country that has bought 38% of Russian crude oil exported since 2022 and 20% of Russian coal. It supplied the Putin Government with €49 billion in sales of crude oil last year. President Trump has taken a very firm stand on this. We appear to have done a deal with the Indian Government in return for a mere £5 billion in trade surplus. Is this the right posture to strike with a country that is supporting Putin’s war machine in this way?

You are quite right that I have long opposed Putin’s illegal invasion of Ukraine. Back in 2014, I was the only Member of the House of Commons who said that if Putin was allowed to take Crimea, he would inevitably come for the rest of it. I was called a warmonger for it at the time. I think that you held a similar position. Of course I want to make sure that every single element of Russia’s war machine is debilitated. However, I am not sure that the India FTA is the place to do that. We have had very direct conversations through the FCDO, the MOD and others too with India about its relationship to Russia. It is true, it is an historical fact, that India’s relationship with Russia has been much closer than many others. I would argue that there are parts of Europe that have been over-dependent on Russian oil and gas, including Hungary.

Not buying 40% of their crude oil though.

No, that is true. As you will know, we have only just banned imports of oil products refined from Russian crude in third countries, which includes imposing sanctions on entities like India’s Nayara Energy Ltd, which Minister Goyal excoriated me for a few weeks ago in Berlin, but we hold firm to our position that we want India to do less business with Russia because we want Russia’s machine to be debilitated. There are lots of things that I want to achieve in the world and not all of them can be achieved through FTAs.

I am conscious that you may have just surrendered one bit of leverage.

No, I do not think that we have. You are right that sometimes you want to use trade policy as a means of securing other ends. However, the deal that we have struck here—although I was not party to the process of striking the deal; it happened when others were in the Department before me—on a whole series of areas manages to secure foreign policy goals of ours and other environmental goals and human rights goals, which otherwise we would not have been able to do. It is not perfect, but it is a very good attempt at perfect.

What about the arbitrary detention of Mr Johal? He is a British citizen. The UN Working Group on Arbitrary Detention has concluded that he is being arbitrarily detained. He has been in prison for eight years now. How does this free trade agreement help you secure the release of this British citizen?

It does not, and it is not aimed to do so. You and I have signed some of the same letters on his behalf and have met with his brother. You and I both met with his brother on the same day on one occasion. I am passionate in wanting to see his release. We regularly make the point to the Indian Government. I know that senior Ministers have done so repeatedly, both under the previous Administration and under the present Government, to try to make sure that his case is dealt with expeditiously. I gather that there are some 12 or 13 aspects of his case that still have not been dealt with the courts. We do not believe that is the right way of dealing with him. I have made those points; other Ministers have made those points as well. I am not sure that the FTA is the place to be able to resolve that though.

You are inviting the Committee to believe that the signature of this FTA does not compromise the UK’s prosecution of its other geopolitical objectives with India.

No, it does not. I agree with what you have just said.

On day one of the implementation of this deal, 28% of UK trade to India will be tariff-free. The other way around it will be 99%. After the full 10 years’ implementation, the UK will get to 66%. With the absence of a detailed implementation plan and a cut in staffing at DBT, and the trade promotion staff moving to the FCDO away from DBT, should there not be a clear implementation plan for how this will work out in practice?

Yes, and we are working with businesses at the moment. We have already had an interaction with about 1,000 businesses specifically on the issue of how to take advantage of the FTA. You are quite right that there is no point in signing an FTA unless you manage to get people to take advantage of it. I might just pick you up, Mr Reynolds, on your characterisation of what will happen on day one and what will happen 10 years in. This is access to one of the biggest markets in the world. It will be the third largest economy in the world by 2030, with a quarter of a billion middle-class individuals buying goods and using services in the years to come. That is a very significant advantage for the UK. We are not the first through the door, but we certainly got the best deal out of the door with India. As you will also know, India has historically been a very protected economy with very high tariffs on a wide range of products—not just on electric vehicles and automotives of 100%, which are coming down to 10%, but biscuits, coming down from 33% to nil, and whisky, coming down from 150% to 75% and then to 40% after 10 years. All of these are very significant gains for the UK.

That might all be true, but from day one, the UK will remove tariffs on 99% of Indian goods, whereas, where we are at the moment, 28% of the UK goods that are being exported to India will be tariff-free on day one. It does feel like there is a massive give from the UK from day one.

I am challenging the way you are using statistics there, because the UK has always been an open trading country. There are lots of tariff lines in the UK that are going down from 3% to nil, whereas tariff rates in India are coming down, as I just said, in relation to whisky from 150% to 75% and then to 40%. You are trying to compare apples with pears and you are not making cider of either kind.

On the fact of DBT shifting the trade promotion staff to the FCDO—

We are not. I do not know where you got that from.

DBT is not moving any promotion staff from DBT through to the FCDO?

The trade promotion still remains with DBT. Although we have had to make significant savings across the whole of the network around the world—reducing from something like 1,600 to 1,000—we have protected—

Fairly significant savings though, 28%-worth of cuts?

Yes, but we have protected the team in India, precisely because we know that there is an FTA that needs to be used and exploited—in the proper sense of the word—by British businesses, and we are very keen to do so. I should also say that in my experience, quite often the FCDO is an absolutely invaluable part of our trade mission. I would not want to differentiate the work that it does. When I was in Dubai a couple of weeks ago, the British ambassador probably knew more about British aeroplanes than anybody working at Airbus and was a very effective salesperson on behalf of the UK Government. He is the ambassador, he is paid by the FCDO, but he certainly takes a line from DBT.

Just remind us what the OBR said about the UK’s forward trade intensity in its forecast last week.

You might have to remind me, because I am not aware of what you are saying.

I think that the OBR concluded that the UK’s trade intensity is diminishing over the forecast period, not intensifying.

It is certainly true that as part of our reduction of the whole DBT—

No, I mean at the macroeconomic level. The UK economy’s trade intensity is diminishing, not increasing, over the forecast period.

One of the facts is that only one in 10 UK businesses presently exports, unlike France, where three out of 10 businesses do, or Germany, where four out of 10 businesses do. It is certainly true that if we were able to get those numbers up to French or German levels, that would probably be the single biggest increase in growth in the UK imaginable. I am not sure, but I think the tenor of your argument is—if I am guessing correctly—that if we employed more people in DBT around the world, that would drive up exports.

I am not asking that particularly. I am asking about the implementation strategy in general. We have taken evidence today about the lack of clarity on, for example, the ratification timetable and when the terms in this agreement will go live. We have heard that that has caused businesses like Jaguar Land Rover a problem, because people are obviously stalling their purchases, awaiting the arrival of new tariff lines at an unspecified date in the future. Many businesses have said to us that the lack of a hard timetable for implementing this deal has, in the short term, been problematic. In the medium term, we do not yet see an implementation plan that has convinced the OBR to upgrade the benefits of UK trade.

I will deal with ratification first, if that is helpful. Obviously we would like to move to ratification as soon as possible. You will know yourself that there are three stages in this whole process: first of all there is the conclusion moment, then there is the fireworks moment when somebody signs everything, then there is the actual moment of entry into force, i.e. ratification. I am hopeful that will be by the summer. That is not entirely dependent on us, because some processes have to be engaged in by the Indian Government and by the Indian Parliament. We have now had our clearance in relation to agricultural goods—a section 42 clearance—so we should be able to start the CRAG process in the new year. I would hope that that would mean late January or beginning of February. I can guarantee we will be having a debate in the House of Commons on the deal, and then we will be able to move forward. I should say that we have not been delaying on talking to businesses. I am slightly surprised about JLR. We have talked to JLR about a lot of things over the last few weeks, as you will know, obviously including cyber-security, which I was originally dealing with and then Minister McDonald was dealing with. There is always an element of uncertainty about the precise timing of ratification when two countries have to do the process at the same time. If I give you another instance, the UK signed a deal with Brazil for a double taxation agreement in 2023. The UK ratified it; Brazil still has not done so.

You accept Mr Reynolds’ broad point that the UK enjoys liberalisation, which is spread over quite long staging periods, whereas the UK is basically taking tariff barriers down across the board pretty quickly?

Yes.

There is an imbalance there.

There is an imbalance in one sense, except that if you are taking a tariff down from 3% or 4% to zero, that is rather different from taking one down from 33% or 25% to zero. It is a different order of magnitude. Secondly, of course the Indian market is very large. I should say that one of the things we are very conscious of when we are driving forward implementation is that it is one thing to have signed the FTA with the federal Government of India, it is another matter to be able to roll it out across all the different states and provinces of India. That is one of the areas where we will obviously want to assist businesses and I know that the Indian Government will want to do so as well. I am also pleased that we have set up a governance structure under the FTA, which means that there is a whole series of issues that we will be able to address on a regular basis. The first top-level meeting of the committee, which will include Secretaries of State from both countries, will be on the day of the entry into force.

The evidence given—

Sorry, do you want to just listen to Kate?

I will in a moment, but the UK removes tariffs on 99% of Indian goods from day one. India provides tariff-free access to 66%, rising to 85% over 10 years. That is the evidence of the difference in tariff liberalisation that we have. I just to want to confirm that that is the case.

That is correct in terms of percentage of lines.

That is correct?

But to add to what the Minister said, when you look at what that means in pound signs for the UK, it is significantly more. On day one of this deal coming into force, the UK will pay £400 million less in duties with the tariffs that come in. By comparison, India will pay £220 million less. While our rates are going down to zero more quickly, because we are seeing such significant drops in India’s, by year 10 we would expect that to go up to £900 million for UK exporters, not even accounting for an increase in trade.

Why would the Food and Drink Federation say in evidence to us that tariff liberalisation was weighted more in favour of Indian producers?

It may be speaking specifically about its sector, rather than about the whole of the deal. If you just take the quota provision for vehicles—Kate will give me the right number, because I will get this wrong in a moment—

37,000.

—even if we use all the quota, the saving in terms of tariffs across the period would be £5.6 billion saving to the UK.

It would be £1.6 billion by year 15. If I could come in on the agriculture point—

Year 15.

—they are talking about the number of lines. It is true to say that, yes, the UK has liberalised more lines, but they are often lines where there was 1% or 2% tariff.

In the parliamentary debate that lies ahead of us—thank you for confirming—would you encourage colleagues to focus on the value of the tariff liberalisation, not the difference in the liberalisation of tariff lines?

As I was trying to explain to Mr Reynolds, the number of lines is less relevant than the commercial value of the total package and of the tariff liberalisation within chunks to the UK. Kate made the very important point that those figures of £400 million and £900 million—at entry into force and after 10 years—are presuming no additional trade at all as a result of the deal. In other words, the savings will be considerably more than that if there is an increase in trade, which is what we confidently expect.

Is that in your impact assessment?

Yes.

Yes, it is. The impact assessment models the long-term benefits up to 2040, which includes GDP increase of £4.8 billion; trade increase of £25 billion in total; wages of £2.2 billion; and fiscal income of £1.8 billion.

You are not telling us that there are benefits that you have crystallised that are over and above the figures that are in your impact assessment and that the OBR scored last week?

I am not sure about the OBR scoring. I cannot answer that, but I am happy to write to you if you want me to.

Do you mean the local barriers in India?

As you will know, within the whole of the Department we have a single hub for businesses to be able to access support, and on that they can seek further support in relation to export. It depends a bit on what kind of business it is, but we have a DBT network in India and they would be able to go to it.

Kate, do you want to go through the pain that was the automotive numbers?

In response to what JLR told you before, it has rightly noted it as a very complex package. That is because autos, for both UK and India, are incredibly sensitive. In the UK we were dealing with sensitivities from producers like Nissan, which makes lower-value models here, as well as the interests of high-end manufacturers like JLR, which is thinking about Range Rovers and more expensive cars. India also has export ambition, but at the moment has a nascent industry, particularly in the EV space. Both sides decided to use quotas, which would essentially allow the UK more access to the high-end spectrum. When JLR was commenting on the complementarity, it is about the UK selling more high-end cars and India selling some lower-value vehicles, but without threatening concerns that companies like Nissan had. The quotas reflect an increase in internal combustion engines, but then that stops and electric vehicles are introduced to account for production and commitments on both sides to transition away from combustion to electric vehicles and the tariffs reduce within that. It is complex, but further to what the Minister said, we are spending a lot of time with those companies explaining it and also working on things like the tariff administration that I know JLR was asking about.

Yes. It does not have the same Government policies that we do, the laws that we have governing how the transition will happen here and the cut-off point for that, but it has aspirations in the EV market as well.

Yes. As the Minister said, we will review the deal every year and every five years there is a full formal review where either side can request to change, amend and update. For both sides, the autos package represents an ambitious but cautious step forward, which responded to industry sensitivities, and the UK quota into India corresponds very closely to the high-end sector. Yes, there are 4 million vehicle sales a year, but a lot of that is auto-rickshaws, cheaper vehicles the UK is not producing and is not going to export. Yes, we will come to a review point, but for now we think it is a good reflection of the UK offer to India in this space.

It is a common bid of ours in other FTAs and in other countries as well, that we want to have access to the higher-end market, because that is where we have an exceptional offer that travels well.

Who got it all, which company—yes. As you will have experienced yourself, that is not an easy process either. You might ask exactly the same question about the quota that we have agreed with the United States of America. This is a keenly fought-over debate, which I am afraid is still ongoing, but that is a debate between DBT and producers in the UK.

It is not my personal decision as to whether JLR gets more of the 37,000 than others. There are arguments in favour of some kind of staging and some kind of allocation within groupings. Kate, did you have any further thoughts during the process?

We are looking at it closely. The assumption is first come, first served, but as the Minister said, we will keep that under review. I know that JLR also asked you a question about who will administer it. The agreement we have with India is that it administers the quota going into the country—so it checks the numbers, checks we are not sending too many—and similarly we administer the quota that we have for Indian vehicles coming in here.

That is a standard process that happens everywhere in the world with any quota arrangement.

In terms of vehicles? I would have to get the exact numbers, but it is an increase on the offer made to India, roughly 90,000 per year. Again, that was to reflect the comparative value of the vehicles and also the tariff decreases that are being made. As the Minister said, India will be reducing its tariff from 110% to 10%, which is significant. The UK’s tariff is significantly lower than that, at around 10%.

Up to, yes. Obviously quotas are not necessarily always filled.

Yes.

It is also a transition to EVs for India. We know that India’s main ambition in its auto space is to produce cheap electric vehicles, in the way that China do. It wants to compete with China. It wants to be in the market. This will be a test, but the quota responds to industry sensitivity on the UK side. It did not want just a blanket opening, it wanted to see how it goes first.

Let me just get that straight. Did you say the Indian quota for auto imports moved up to 98,000 in year one?

Yes, 98,000. Kate is getting a precise figure.

I can get the exact figure. We can send you the precise figure, but it is closer to 100,000.

The UK quota into India is what? We have two different figures. We have 28% of 37,000, which is obviously a reasonably small number, but we also have 20,000.

I can go into this in detail. The UK will get 20,000 in year 1 for combustion engine vehicles, rising to 37,000 by year 5. At that point, that quota will start to decrease because we start to get a quota for electric vehicles. The electric vehicle quota starts at close to 4,500 in year 6 and then increases to 22,000.

How do you justify India getting a quota of 100,000 in year one and the UK getting a quota of 20,000?

Again, it is not about comparing apples and pears. If the EV quota alone—4,400 cars, rising to 22,000 cars per year—was filled, that would save an estimated £336 million for the UK in tariff payments in year 6, and £1.68 billion—the figure we referred to—in tariff payments from year 15. It is the amount that is saved that is the deal for us. Also it is cutting its tariffs much more significantly than we are.

We can. Obviously they are prospected rather than what we think would happen in the future, but yes, I am quite happy to write on these automotive numbers, if that would be helpful.

That would be very helpful. There is such a huge imbalance in the raw numbers that I think understanding the underlying values will be important, or indeed the tariff savings, but let us hear the justification.

In effect, I think this is what you have just said, Chair. There are the two bits of it: first, that India’s tariffs are coming down from 110% to 10%, whereas our tariffs are falling a much smaller amount; and secondly, the value of the cars that we are selling into the Indian market—the value of an individual car—is significantly higher than the value of the individual cars being sold into the UK market.

If you could do your best to persuade us that there is a fair deal here by setting out some numbers, we would be very much in your debt.

We will do our level best.

Thank you very much. We flagged this issue about fuel policy as a potential non-tariff barrier. Could you tell us whether that is a risk to—

What policy, sorry?

The emergence of a new Indian fuel policy and whether that is a threat to UK car sales. Is it another non-tariff barrier that we should be worried about?

Yes, we are aware of it. What I would say is that with this deal, we expect there to be lots of unexpected changes, new laws, things in India that could create problems and challenges for the deal. What the deal has done is opened up a way of talking to the Government of India about trade. I genuinely believe they want to make trade smoother and easier, and improve consumer choice in India. We will be talking to companies and looking at ways to raise that in the most relevant forum.

In terms of that structure—that is as important in order to make the FTA really work—there will be the annual meeting of the joint committee of the two Governments on the FTA, and below that there will be a series of sub-committees on goods, sustainability, SPS, services, standards and technical regulations and conformity. That means that there will be a full series of ways in which any issues that arise—whether this or others that you might raise later—can be addressed swiftly, dealt with and changes brought in, if necessary.

Will these work better than the working groups that we have with the European Union?

That is inviting me to comment on our relationship with the European Union.

We touched there on the non-tariff barriers. This is clearly going to be a big problem as we move from the philosophy of all this into the implementation. One of the big problems is quality control orders. The Indians seem very fond of these, and they have been described as being put in place by stealth; they are disguised as quality control. A striking example was chemicals, which cannot be imported into India unless they have a Bureau of Indian Standards certification, which requires inspection in the country of origin. That is obviously a way of stifling trade. How much influence can we have on that? How can we knock these barriers aside?

Technical standards are one of the areas where we will have one of the sub-committees. You are right that this is often true. For that matter, sometimes a country quite understandably wants to protect, for instance, its agricultural standards, its farming standards, just as we do in the UK. Just because there is liberalisation of a particular line, that does not necessarily mean that an individual company will be able to import into a country unless it manages to meet those agricultural standards as well. There is a bit of a balancing act to be achieved here. One of the good things that we have achieved in the FTA is that there are a series of commitments made by the Indian Government to address all of these issues.

You have a system in place, but we are not sure of the timeline of that. When will these meetings begin? It could be very difficult negotiations and it could take a long time before we see practical change.

I do not want to be panglossian and presume that everything is going to change very suddenly. As I said, we have done a deal with the federal Government of India, and different states have different rules, as does Canada, for that matter. Different provinces in Canada have different rules for their internal markets.

Keep the focus on India for today.

It is a simple fact that this is one of the areas where we will have to continue working to be able to make sure that non-tariff barriers are addressed just as effectively as others. We do have some commitments already in the FTA, for instance around no derogation of existing laws in relation to the environment and things like that. That is an important win for us and has not been achieved in other FTAs with India. We also have commitments around customs. One of the difficulties that many people have is that something sits in a warehouse in a dock for weeks and weeks waiting for its licence to come through. We have commitments from the Indian Government in relation to that. We have spotted a lot of these problems and they are dealt with in the FTA.

I would agree with that completely. Prior to starting FTA negotiations, our work with India focused predominantly on market access barriers and there was an annual dialogue at Minister level to address them. It was not easy—these barriers often exist for reasons—but the FTA strengthens the mechanisms we have and creates more openings to raise them. The important thing is that we keep working with businesses to hear about them. It is not just about promoting the FTA and telling them how to use it, it is about how it is going and where are the problems now.

You have outlined some of the difficulties that DBT faces at the moment with resources; resources are scarce right across Government. Given those cost pressures, how confident are you that the FTA can be implemented through things like the joint committee and the structures that you have outlined? You said that the trade promotion team within India has been protected, but you also have to have all these other negotiators as well, effectively. Do you have the resource for all of this?

All those other negotiators, sorry?

You are saying that you are going to have a series of negotiations effectively through joint committees and things like that and you are going to be talking to the Indians. That is going to be a sizeable team.

That is resourced separately. That is resourced from our team here in the UK.

So that all comes under the DBT at a time when you are under pressure.

Yes. It is just a fact that Government are going to have to do more with less and with fewer people over the next few years. That is a fact. We are resolute that one of things that we have to do is focus. One of the things we are focusing on is India. It is making sure, because this is such an important market for us—historically protected, now open to us—that we have the best deal out of the door, and there are a series of different dispute resolution systems under the FTA that we are determined to make function.

We have 4,618 non-tariff measures embedded in 479 regulations. We have the emergence of new quality control orders and a thicket of new legislation and regulation at the state level. All three of those problems are going to be cut through by this extensive set of committees that you have set up; is that the story?

No. It is just like we in the UK have a whole load of legislation, which some might attack—I think the NFU said to you earlier today that we had not protected the dairy market in the UK in the way that it would want. At the moment, there is no Indian company that has met our licensing requirements for dairy in the UK. Somebody in India might say that is a non-tariff protectionist measure. It is not. It is just a means of us making sure that we meet the FTA sanitary requirements that we want for our dairy product. Out of your 4,618 measures, there will be a number that are perfectly legitimate and are not non-tariff barriers, but there are others where we will want to take action, yes.

How will you assure Parliament and business, given what is quite a well-known problem—red tape inside India—and how will you ensure that you have the right level of DBT resource focused on that problem? How will you think about the right level of resource to tackle this problem on behalf of UK business, given the ambitions that you have for the success of this deal?

That is why we have already been speaking to a lot of businesses in India. The process of going through this has thrown up a lot of the problems that we know will exist. That is why we are able to have a pretty convincing idea of precisely where business will, from day one, be easy to transact. That is why it was important to us that we got commitments around customs and a structure for being able to cut through Gordian knots.

Some of this resource is not just yours. The agrifood attachés are actually DEFRA. How do you broker that resource conversation between your colleagues in Government to ensure that they are all co-investing with you at the right level?

One of the conversations that has been going on—and started before my appointment—with other Departments and the FCDO is how we make sure that the whole of the UK Government presence in India is geared towards implementing the FTA and enabling UK businesses to export into that market and exploit the opportunities that the FTA provides. You could say the same about military attachés, many of whom are also engaged in discussions around relevant sectors for them.

Are you able to specify for the Committee in writing the level of resource that you have on implementation for this?

Yes, I am happy to write if that would be helpful.

That would be very helpful, thank you. To pursue the NFU’s evidence, what do you have against dairy farmers?

I have been trying to explain already that I do not have anything against dairy farmers.

Why are we still facing dairy tariffs of 30% when we have taken all our tariffs down to allow dairy imports for the third time in a row?

As I was trying to explain earlier, my point here is that there are not going to be any dairy products coming in from India at the moment because none of the companies have the required licenses to be able to import into the UK because they do not meet our standards. One of the things that we have been very keen to do in all of our FTAs—both under the previous Government and ours—is to assert, maintain and secure that there is no diminution of the required agricultural and food standards in the UK out of any agreement that we may sign up to. People still have to abide by the law in the UK when they bring something into the UK that they intend British consumers to consume.

The NFU has told us that there will be two tiers in standards for food circulating in the UK, because we are allowing food to come in from India under this deal with licensed standards. Is that incorrect?

That is incorrect.

There is no formal dispute resolution procedure for the SPS chapter. The obligations rely on co-operation and dialogue rather than binding enforcement. How will we ensure that there are disputes resolved when it comes to SPS if there is no such formal dispute resolution procedure?

There are a few points on SPS that I want to pick up on from that. The first is that we do have a SPS committee. There is a body that will meet annually to review SPS within the architecture. While there is no dispute settlement, there is recourse to the WTO and very clear considerations within the chapter about emergency measures, where either party can halt processes if they have concerns about food standards. There is a robust system in place on the UK side to defend that as well. I would also add that the TAC report, which was published just a few weeks ago, deemed that it does not see any threat to UK food standards from this trade agreement.

That is obviously different from the evidence that we have received from the AHDB, which warned that this could become a significant competitive threat as India modernises its sector. Is that wrong?

A competitive threat is different from a standards threat. The point is being made that the independent body—

The competitive threat is because we have taken down its tariffs while our exporters still face tariffs of 30%.

I understand the point you are making, but I am making a different one. I thought we were referring to the NFU trying to claim that there were two sets of standards that were going to be introduced into UK dairy.

That was half of its objection; the other half was tariffs. There were basically two objections: the first was about the unequal tariff arrangements that we have agreed, and the second was about the possibility that there may be two tiers of standards on safety regulation.

As with any deal, when it comes to agricultural issues, of course there are issues that are of particular concern for some countries and not for others. There are issues that we deliberately did not put on the table and there are others that India did not. We have already had clearance from an independent body that the FTA will not lead to any diminution of food standards—I hope that deals with that half—and the only way in which India would be able to export cheese into the UK is if it was able to meet all of our standards. At the moment, that is not the case.

For the dairy sector—for our dairy exporters—your argument is that they are not commercially disadvantaged by the deal that has been struck with India.

I do not know whether Kate was more intimately involved in the process of deciding.

We talked about agriculture in the round with India, because for farmers in both India and the UK, trade liberalisation is incredibly sensitive. The deal excludes products that are the most sensitive ones for both sides. For the UK, that is milled rice, sugar, pork, chicken and eggs. For India, that was dairy, along with a few other products. Yes, we did lower our dairy tariff for India, but at the moment we do not import dairy products from India and it was not raised as one of the main concerns from our agricultural sector in terms of competitive threats coming in. What the package does is seek to protect the most sensitive sectors on both sides, and they were not necessarily the same products.

Your argument is that the agriculture deal has to be judged in the round.

I would say that.

In the end, the deal has to be judged in the round but, yes, you are absolutely right, the agricultural deal has to be looked in the round. As you know, in every single negotiation it is one of the most sensitive areas.

The British Chambers of Commerce, TheCityUK, the UK Trade Policy Observatory, Deloitte and the Resolution Foundation have all been clear that the FTA contains limited new market access for services. How successful do you think the UK services chapter is, Minister?

In many regards, it is as important in services as it is in goods, but sometimes it is more difficult to evaluate. For instance, we have gained market access on telecommunications—UK firms can now invest up to 49% of foreign direct investment, and subject to Government approval up to 100%—and that is a significant win for us. Likewise, in construction services, UK firms have a 100% FDI cap, and similarly on environmental services. We have also gained access to procurement in India, which has been historically very difficult for anybody outside of India to be able to secure. All of that is good. We have managed to lock in some of the provisions that we have already achieved. It is by far the most ambitious India deal in relation to services so far. It binds in access to over 43 sectors and promotes non-discrimination. That means that any British company will have to be treated in precisely the same way as an Indian one in services. All of that is a significant advantage and we expect that the services export will be increased to something like £1.6 billion a year.

One of the panels earlier was talking about procurements. It said that one of the things it needed to see was that procurement was going to be open and transparent, and that there would be recognised feedback given so we can see that UK companies are not only able to go and try to procure, but are able to be successful in those tendering processes. What work is DBT doing to ensure that that process exists?

First of all, it is worth bearing in mind that we have gained access to potentially £38 billion-worth of contracts in India in sectors including advanced manufacturing, healthcare, construction and infrastructure. When you bear in mind India’s historic “made in India” provisions, that is a very significant improvement. Yes, we would always want to see greater transparency, but this is a significant achievement within the FTA.

Is procurement not another example of a huge asymmetry here? We have opened up the UK procurement market, which is about £341 billion, in return for being able to address an India procurement market that is almost 10 times smaller at £38 billion. That is a huge asymmetry.

The total Indian procurement market is £500 billion.

But this does not give us access to that.

No, it does not give us access to all of that, but I hope and have an aspiration that we will be able to improve on that in future years. As I say, the UK has always had an open procurement policy and India has historically always had a very closed one. This is a much more significant advance that we have made and it has not been achieved by any other country in any of the other FTAs.

You accept that it is a huge asymmetry?

It is a different amount of money. It is a much more dramatic change that it is giving to us than the other way round.

The UK offer to India is in line with our WTO rates, so the amounts that are open to any member of the government procurement agreement within the WTO. We have given India access to the rates that are already open, whereas the UK is the only country to have any access to India. Yes, the rates are different, but as the Minister said, it corresponds with the relative openness of our countries at the moment.

Obviously we have the £38 billion versus the £340 billion potential, but also the minimum thresholds that the UK and India can bid for procurement differs—India is about three times the UK—and does that not just lock in an asymmetry?

That is the point about the WTO levels. The rate that the UK has offered is the rate that we have offered to all other WTO members who are in the GPA, whereas what India has offered to us is unique. We are the only country in the world that has any access. Yes, you are right to say there is an asymmetry, but in terms of first mover advantage—and I would say privileged access—it puts the UK in a strong position.

We have also heard evidence that intellectual property protections have not been upgraded in the way that was hoped. The evidence that we have received says that the deal does not address long-standing industry concerns on IP protections and will not, for example, support the UK’s pharmaceutical growth ambitions. The BioIndustry Association told us that there is no binding FTA commitment for India to raise its IP standards or enhance its existing enforcement provisions. Why were the intellectual property protections not stronger in this deal?

For a start, it would have required significant and legislative change in India. We would have liked to have been able to see us go further in this, and we were not able to do so. There is always a balancing act between wanting to be able to ensure that your own country is able to innovate in life sciences and pharmaceuticals and being able to take advantage of generic products. That is a balancing act, and India falls into a different camp from us.

There has been some progress on legal services and mutual recognition of qualifications. Why did we not achieve more on those two objectives?

Likewise, legal services are always very difficult and nearly every country in the world—India particularly—has a concept of legal services as being a noble profession, and this again would require significant legislative change in India. There came a point at which we deemed it would be too difficult to be able to achieve that.

Would we have achieved more in this deal if we had made bigger concessions on mobility?

I was not involved in that process. I do not know whether that was a demand, but we were very keen to make sure on business mobility—and everybody that was referred to earlier by Mr Reynolds has welcomed the changes that we have secured there—the locking in of the system, which has been welcomed. That was where we thought that there was a significant advantage for the UK, and we wanted to make sure that that prospered. I do not know if Kate felt that that was part of the negotiation process.

I am not sure that we would have done. If you look at the things that the UK did not get that particularly matter to our services sector—legal services, data localisation, which the panel talked about, and access to dairy—these were all things that were intensely politically sensitive for India. It heard from me and our Ministers for over four years about why the UK wanted them and we tried our absolute hardest, but there were lots of reasons outside our control why it would not move. While I am sure that there might have been some other small things we may have had different outcomes on, I am not sure it would have moved the dial on some of those big things.

Under the national insurance deal, we have had some evidence that there could be a loss of up to £200 million in national insurance payments from the UK as a result of the double contributions tool that has been struck. Is that a figure that you recognise?

I have not seen that figure, no. Obviously this process is not completed. That negotiation still has to be completed and it is one of the other reasons why it is difficult to be precise about a date for entry into force and full ratification, because we have said that these two things will happen at the same time. I want to make it absolutely clear that this does not mean that an Indian worker temporarily based in the UK will suddenly be cheaper than a British worker, which was one of the attacks that was made by some in the press when the FTA was agreed.

How can you give that assurance?

If you look at the figures of significant costs, first of all national insurance contributions in India and in the UK are broadly comparable. They are not identical, but they are broadly comparable. Secondly, this is only for people who are working here on a temporary basis. Thirdly, the additional charges that there are—for instance, in terms of the national health service surcharge, which is more than £1,000, although I cannot remember the precise figure; the sponsorship; the sponsoring body costs; visa applications—mean that it is not a cheap option. It is, however, a sensible measure. Incidentally, I should say that it is something that we do with a very large number of other countries. It is not as exceptional as some people wanted to suggest. I have a list somewhere that I am happy to provide you with.

In the IOD’s evidence to us, it cited one of its members, who said that businesses will replace workers in the UK with workers from India via Tata Consulting Services, Wipro and Mastek”. It is quite an important point. Maybe one way through this could be if you supplied a worked example of the total cost of employing somebody from India here in the UK on a visa under these arrangements compared to an equivalent UK worker. Would that be something you might be able to supply?

I can do my best in providing that. It is worth bearing in mind that India has 19 similar agreements already in place with countries as diverse as Canada, Japan, Austria, Luxembourg, Denmark, South Korea, the Netherlands, Hungary, Czechia, Finland, Sweden and Portugal. We have similar agreements not only with all of the EU member states, but with South Korea, Japan, Chile, Switzerland, Barbados, Canada, Israel, Jamaica, Mauritius, Philippines, northern Macedonia, Serbia, Montenegro, Kosovo, Turkey and the United States of America. In one sense, it would be odd if we were not to have such an agreement.

But none of those countries have the same kind of IT industry that India does, so the question that we are exploring is whether there is going to be a substitution of workers in the IT industry in particular.

I would challenge that.

Tata Consulting Services, Wipro and Mastek are all Indian behemoths that are supplying IT services globally. They are very good, they are very competitive. The challenge that we are trying to work through is whether UK IT workers are going to be undercut as a result of this new free trade agreement.

As I say, all the work and measuring that we have done would suggest that that is not the case. I am confident in the projections that we have made.

You are happy to share those projections with us?

I will certainly write to you. I think this is the fourth thing that I am writing to you on.

We are keeping a list.

I am sure you are, and so are we. I have you on my list.

We have also heard some appalling evidence this afternoon about forced labour in industries like the brick industry in India, and we have heard about how that risks undercutting the UK brick industry. This is obviously very significant, given that the UK has such significant building and housebuilding ambitions. We have heard that the provisions in the free trade agreement do not do very much to upgrade labour standards in India. How are you going to ensure that UK brickmakers or others in similar industries are not going to be undercut by the use of forced labour in Indian supply chains?

First of all, we are wholeheartedly opposed to forced labour, whether it is in India or in any other country. Secondly, I am delighted that this is the first stand-alone chapter on labour and there are other chapters as well on development, anti-corruption and gender in the FTA. People have been dismissive about this, but it is a very significant change for India that there are these chapters. It is true that these are primarily facilitative. They are not subject to a dispute settlement mechanism, and I understand why some in civil society have criticised that. As you know, in the UK at the moment we are engaged in the Department in a review of good and responsible business conduct, and one of the issues that people have raised with us is the issue around forced labour. I am glad that the chapter on labour reaffirms commitments to protections under the ILO and that it encourages good practice. These are some of the issues that will definitely be referred to through some of the sub-committees and the joint committee, if they are considered to be significant and serious enough.

India obviously opposed CBAM pretty vociferously through these negotiations. Once the UK has a CBAM in place, how are those tensions going to be managed?

First of all, there is no mention of CBAM in here—there is no carve-out of CBAM—so CBAM stands and it is one of the things that India know we are going to be implementing.

Do you foresee tensions in the management of CBAM once it is implemented?

I foresee many tensions on many things.

But you have an extensive committee structure for those.

We do have an extensive committee structure. The truth is, as I said right at the beginning, an FTA is only the start of a process. It often feels like the end of a process because Kate and her team have slogged their guts out and gone on endless meetings and so on, but the truth is it is all about the implementation and making it work. You may call me naive, but I think that where we establish more trade in more sectors, largely on the basis of free trade and under the WTO rules—the rules-based order—we do manage to achieve better working conditions, greater recognition of gender inequality and greater opportunities to tackle forced labour. All of that, and the fact that it even gets a mention in an FTA today—and this FTA is the first that India has ever done with these regulations—is a significant achievement for the negotiating team.

It is a first step, not a last step?

Yes, completely. One tiny other thing that you and I have on occasion bemoaned in the House is the fact that whereas 20 years ago there was a general expectation that free trade around the world would grow, in recent years that space has tended to be more limited, rather than grow. Still 72% of trade in the world is done under WTO rules—this adds to that—and that is good, but we need to protect that process. and that is why FTAs are an important part of driving forward that rules-based order.

Is a next step a bilateral investment treaty or is that prospect dead?

It is not very alive at the moment. It is certainly one of the things that we need to consider, because investment between our two countries is a key part of enabling some of the other aspects of any deal.

If there are no other questions from the Committee—

Didn’t you want to ask me about ISDS?

Not at this stage. We have the evidence we need on that. You have very kindly committed at the top of your remarks that there will be a debate in the House on this. Is that something you can confirm?

Yes. As the Minister who took forward CRAG in 2009-10, it would be bizarre if the Government did not want to have a debate on the FTA, not least because we think that it is a very dramatic and significant achievement. It will lead to the protection of jobs in the UK. It will make people in the UK better off and it will enhance our reputation around the world.

That would be on a substantive motion?

It will be on a motion.

Thank you very much for your evidence today, that has been extremely helpful. We have covered an awful lot of ground. We are incredibly grateful to you for the time and clarity. That concludes this session.