Resumption of Negotiations
After a nearly year-long hiatus, the United Kingdom and India have resumed discussions on a comprehensive free trade agreement (FTA). UK Business and Trade Secretary Jonathan Reynolds arrived in New Delhi to engage with India’s Commerce Minister Piyush Goyal, marking the 15th round of negotiations. The talks had previously stalled in March 2024 due to disagreements over visa policies and social security payments.
Key Objectives
The UK aims to secure significant tariff reductions on exports such as food, automobiles, and whisky, which currently face duties up to 150%. Additionally, the UK seeks enhanced access for British service providers in sectors like accountancy, architecture, and technology within India’s rapidly growing economy. Conversely, India is advocating for a social security agreement to alleviate national insurance costs for its workers in the UK and seeks binding commitments allowing Indian students to remain in the UK for two years post-graduation.
Economic Significance
Bilateral trade between the UK and India is valued at approximately £41 billion ($51.8 billion). With India projected to become the world’s third-largest economy by 2028, both nations recognize the strategic importance of solidifying their trade relationship. Investment Minister Poppy Gustafsson is also visiting key Indian cities, including Mumbai and Bengaluru, to promote the UK as a prime destination for Indian investments.
Challenges Ahead
Despite mutual interests, several contentious issues persist. India has expressed concerns over the UK’s proposed carbon taxes on imports, which could impact its exports. Additionally, India’s desire for more relaxed visa regulations for its professionals and students remains a sensitive topic within UK domestic politics. Both parties are striving to balance these concerns to achieve a mutually beneficial agreement.
Political Context
This round of negotiations is the first since the UK’s Labour Party assumed power in July 2024. The new administration has prioritized finalizing the FTA with India, viewing it as a pivotal component of its international trade strategy. The outcome of these talks could significantly influence the UK’s post-Brexit economic landscape and India’s global trade relations.
