India and the UK have re-launched negotiations for a free trade agreement (FTA) that could in the next 10 years “double or treble” bilateral trade from $20 billion per annum now.
Commerce Minister Piyush Goyal and Britain’s Secretary of State for Business and Trade Jonathan Reynolds jointly announced the resumption of FTA talks on Monday in New Delhi after an eight-month hiatus following the Labour Party sweeping to power in the UK in the July 2024 elections defeating the Conservatives.
“Both sides have agreed to resume negotiations towards a balanced, mutually beneficial and a forward-looking deal that delivers growth and builds on the strengths of the two complementary economies,” per a joint statement issued after the bilateral meeting between Reynolds and Goyal.
Responding to a question at a joint media briefing on the proposed India-UK bilateral investment treaty (BIT), Goyal said the two countries were actively negotiating on three fronts, including an FTA, a BIT, and a Double Contribution Convention Agreement (social security pact where social security contribution of short-term cross-border workers are exempted or reimbursed).
‘Speed sans haste’
On a possible deadline for the trade deal, Goyal said that one shouldn’t rush into things but it was always good to conclude fast. “We will have speed but not haste,” he said.
Reynolds said the quality of agreement was important and there was strong support from the British government for the India-UK FTA. “There is really an urgency and this is a top priority for the UK government and has strong support from British Prime Minister and key Cabinet colleagues,” he said at the briefing.
The sense of urgency to conclude the India-UK FTA may also flow from US President Donald Trump’s tariff threats on trade partners, including India and the UK, that cast a shadow on global trade prospects, although there was no direct mention of this by the two leaders.
Key areas
Sectors such as advanced manufacturing, clean energy, financial services, and professional and business services, that have been identified in the UK government’s upcoming industrial strategy, could be backed by the FTA, a statement issued by the British High Commission in India noted.
The India-UK FTA negotiations, which started in January 2022 under the Conservative Party leadership in the UK, had been stuck over a handful of issues such as greater market access in India for automobiles, auto parts, Scotch whiskey and financial services as also more liberal business visa norms in the UK.
“The two leaders directed the negotiators to work together to resolve the outstanding issues in the agreement to ensure a fair and equitable trade deal for shared success,” the joint statement pointed out.