India and Britain look to create bilateral trade pact

India and Britain are evaluating the possibility of a free trade agreement (FTA) to guide bilateral trade after Britain officially leaves the European Union.

Britain has actively sought to redraw economic ties with the world after a referendum last month went in favour of the country leaving the EU. UK business secretary Sajid Javid was in India on Friday to start initial discussions in this regard. "We already have a strong trading relationship with India and we hope to build on that," he told the media on Friday after meeting Commerce and Industry minister Nirmala Sitharaman.

Sitharaman said India would soon start preliminary talks with Britain regarding the possibility of a bilateral trade deal that will kick in once Britain formally leaves the EU. This informal process would start moving once chief negotiators from Britain come to Delhi, she added.

However, Sitharaman said with Britain moving out of the EU, ongoing negotiations over the proposed India-EU FTA would have to be restarted. The talks had been stuck in recent times over the referendum in support of Brexit.

Javid, expected to meet with Finance Minister Arun Jaitley, will over the coming months conduct talks with US, China, Japan and South Korea as Britain seeks to replace agreements the EU has with more than 50 countries. "Following the referendum result, my absolute priority is making sure the UK has the tools it needs to continue to compete on the global stage," his office had said in a statement.

Javid also held talks with senior management of Tata Steel, including Chairman Cyrus Mistry, ahead of the company's board meeting later in the day. Javid's meeting with the Tata management was crucial amid reports that Tata Steel might pause plans to sell off most of its troubled UK units. The British government wants to stop the sale, which might push nearly 2000 jobs into uncertainty.

Javid did not comment on the meeting.

Britain is the largest G20 investor in India, while India invests more in Britain than the rest of the European Union. India has also emerged as the third largest source of foreign direct investment for Britain. On the other hand, Britain was the third largest investor in India during April 2000 to September 2015, with cumulative inflows of 22.5 billion pound.

Bilateral trade in goods and services between the two countries was £16.55 billion in 2014-15.