February 21, 2025
The FTA talks, which began in January 2022, had completed 13 rounds before being paused by the UK in May 2024 due to elections
The agreement seeks to eliminate or reduce tariffs on key goods, enhance trade in services, and improve bilateral investments between the two countries
India is pushing for greater access for skilled professionals in the UK, while Britain is seeking tariff reductions on scotch whisky, electric vehicles, and other goods
Bilateral trade between India and the UK rose to $21.34 billion in 2023-24, with both countries negotiating a separate bilateral investment treaty alongside the FTA
After an eight-month break, India and the UK will resume negotiations for a free trade agreement (FTA) on 24 February, according to an official source. UK Secretary of State for Business and Trade Jonathan Reynolds will visit India for discussions and hold a bilateral meeting with Commerce and Industry Minister Piyush Goyal.
Talks for the India-UK FTA commenced on 13 January 2022, with 13 negotiation rounds completed by December 2023. The 14th round began in January 2024 and was interrupted in May when the UK paused negotiations due to its general elections. Discussions will now resume from the previous progress, aiming to bridge the remaining gaps and expedite the finalisation of the trade deal.
The proposed agreement is designed to facilitate trade and investment by reducing or eliminating customs duties on most goods and easing regulations for services and cross-border investments. Indian industry representatives have been advocating for greater access for skilled professionals in sectors such as IT and healthcare in the UK market. Additionally, India is seeking tariff-free market access for multiple goods.
Meanwhile, the UK is pushing for significant tariff cuts on scotch whisky, electric vehicles, lamb meat, chocolates, and confectionery. It also aims to expand opportunities for British service providers in India, particularly in telecommunications, legal, financial services, banking, and insurance.
A potential boost to negotiations comes from India’s latest financial sector reforms. Presenting the Union Budget 2025-26, Finance Minister Nirmala Sitharaman proposed raising the foreign direct investment (FDI) cap in the insurance sector from 74% to 100%.
The trade deal covers 26 chapters, including goods, services, investments, and intellectual property rights. Bilateral trade between India and the UK grew from $20.36 billion in 2022-23 to $21.34 billion in 2023-24.
Economic analysis indicates that the agreement would benefit Indian exports such as textiles, apparel, footwear, carpets, and agricultural products, which currently face tariffs in the UK. In contrast, British exporters stand to gain from India’s removal of high tariffs on key products, such as 100% on cars and 150% on scotch whisky and wines. India’s simple average tariff on UK imports is 14.6%, compared to the UK’s 4.2% on Indian goods.
The UK, which exported $2.7 billion worth of precious metals and $374 million worth of Scotch whisky and other alcoholic beverages to India in 2022-23, is India’s sixth-largest investor, with $35.3 billion in FDI inflows between April 2000 and September 2024.
Source: Business Standard