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India and the United Kingdom (UK) are likely to restart the free trade agreement (FTA) negotiations later this month, after a hiatus of nearly a year.
A team headed by UK’s Secretary of State for Business and Trade Jonathan Reynolds will travel to New Delhi on February 24, two persons aware of the matter told Business Standard. The last round of negotiations took place in March 2024.
Trade talks between the two countries were launched in January 2022 under the Conservative government led by former British Prime Minister Boris Johnson, with a target to seal the deal in nine months.
However, political instability in the UK, unresolved differences over various issues, and general elections in both nations during April-July 2024 delayed the deal.
In November last year, relaunch of the FTA talks was announced following the meeting of Prime Minister Narendra Modi and his British counterpart Keir Starmer on the sidelines of the G-20 summit in Brazil. Some of the contentious issues in the FTA include India demanding movement of skilled professionals in the services sector, a social security agreement, and relief measures under the UK’s proposed carbon border tax.
On the other hand, handling the UK’s demands such as reduced tariffs on whisky and automobiles, opening up India’s sectors like legal, architecture, and financial services have also been tricky for New Delhi.
Also, both sides have struggled to iron out differences in the bilateral investment treaty (BIT) over resolution of disputes. On the brighter side, the Union Budget 2025-26 has announced India’s intention to revamp the current model BIT and make it ‘more investor-friendly’ to encourage sustained foreign investment.
The proposed trade deal, if it materialises, will be strategically and economically critical for both nations.
The UK is India’s 16th largest trade partner, with a total trade of $15 billion during the first eight months of the current financial year. The UK was also India’s fourth largest export destination during the same period. Exports from India stood at $9.6 billion while imports from the UK stood at $5.4 billion.
Much delayed
* Last round of negotiations took place in March last year
* Trade talks were launched three years ago under the Boris Johnson-led Conservative govt
* Political instability in the UK, unresolved differences over various issues, and general elections in both nations delayed the deal
* FTA talks were relaunched in Nov last year after the meeting of PM Modi and his British counterpart Keir Starmer on the sidelines of G-20 summit in Brazil
