Britain's efforts to limit migration of professionals from outside the European Union is likely to be neutralised by an India-EU trade agreement that may allow Indian professionals to bypass British immigration laws and take up work in UK.
The India-EU free trade agreement is expected to be signed in December, and the David Cameron government is divided over the issue, 'The Daily Telegraph' reported today.
Placing the annual limit on non-EU professionals is a key promise of the coalition government.
The controversial measure has been opposed by many, including ministers and British companies.
'The Daily Telegraph' reported that the India-EU agreement had split some of the most senior figures in the Conservative-Liberal Democrat Coalition.
Business Secretary Vince Cable and Foreign Secretary William Hague argue that the EU-India agreement must go ahead because it is worth hundreds of millions of pounds to business.
But Prime Minister David Cameron and Home Secretary Theresa May are reported to be opposed.
They, and other Conservatives, have insisted that the government uphold the promise to bring down net immigration.
The European Commission has asked for comments by the end of October from the British government and other EU governments on a negotiating position.
The report said: "India has insisted on increased mobility for its skilled workers in return for reduced tariffs on European products and the lifting of some restrictions on businesses bidding for public procurement contracts".
Under the current EU negotiating position, Indians' who are skilled professionals will be able to work in any EU country under contract.
UK will be bound by any final EU agreement and British companies will be able to recruit in sectors such as information technology, management consultancy and engineering.
The report added that many Conservative politicians fear the trade deal will undercut the wages of British managers and "make a nonsense of a promise to cap immigration from non-EU countries".
David Frost, the director general of the British Chambers of Commerce, said, "The UK must maintain its position as a member state that is an advocate of free trade, and we must surrender no ground to protectionism.
We cannot allow any proposal to improve the UK-India trade relationship to be delayed because of disagreements within Europe over the movement of highly skilled migrants".
A Brussels study has predicted that under an EU-wide deal with India, Europe's economy would grow by 3.9 billion pounds a year, the report said.