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UK government pushes for quick FTA with India

Top 5UK government pushes for quick FTA with India

New Delhi: The negotiations between India and the United Kingdom over the Free Trade Agreement, which had stalled due to the general elections in both countries, have resumed with the Keir Starmer-led Labour Party government making it clear that they want to sign the agreement without unnecessary delays.

Official sources in the UK government, aware of the matter, told The Sunday Guardian that the “pause” in the talks has ended regarding India and discussions have begun to conclude the FTA, which they said was “a few hours’ of discussion” away from being agreed upon by both sides.

While the transition in power in India did not change the political entity in power as the Narendra Modi-led BJP was re-elected, in the UK, the Conservative government of Rishi Sunak lost, which caused concerns among certain quarters in New Delhi that the new incoming government in London would like to rework the FTA and introduce new demands and limitations.

However, London has made it clear that it will not seek any new concessions and, like the previous government, is looking to wrap the negotiations as soon as possible, given the delays that have already affected the discussions. The Labour Party, in its election manifesto, had promised that it was committed to signing the FTA.

The negotiations between the two countries to sign the FTA started on 17 January 2022, with an initial deadline of October 2022. In comparison, the FTA between India and the UAE took just three months of negotiations to be signed.

So far, 14 rounds of discussions have taken place between the official representatives of the two countries, the last being held in March this year, which was described as the last-ditch attempt by Sunak to sign the FTA before the polls in both India and the UK. A small team of senior bureaucrats had landed on 4 March in Delhi to iron out the remaining differences, but the talks ended without any finality being reached.

Sources said that apart from India, UK officials have also resumed similar talks with the Gulf Cooperation Council (GCC), Israel, the Republic of Korea, Switzerland, and Turkey.
According to them, the urgency to complete these FTAs is based on the understanding among the UK bureaucracy that these FTAs would take time to show results, especially in light of recent geopolitical developments, and hence avoidable delays would impact the UK’s long-term plans for economic resilience.

The UK’s FTA strategy has been a focal point since Brexit, as the country seeks to establish new trade relationships outside the European Union.
India is the UK’s 12th largest trading partner, accounting for 2.1% of total UK trade. As per the latest data released by the UK’s Department for Business and Trade, the total value of trade in goods and services between the UK and India was £38.3 billion at the end of 2023, an increase of 24.1% or £7.4 billion from the end of 2022. In 2021, trade between the UK and India was valued at around £23 billion, with both governments targeting an increase to £50 billion by 2030.

For British manufacturers and service providers, India, as one of the world’s fastest-growing economies, presents significant opportunities for the consumption of their products. Once the FTA between the two countries is signed, it will be India’s first FTA with a member of the G-7 club.

In January this year, Defence Minister Rajnath Singh went on a two-day visit to the Kingdom to discuss multiple issues, including the early completion of the FTA. It was the first visit by an Indian Defence Minister to the UK in 22 years.
Officials said that the discussions are focused on resolving issues related to goods, services, and investment, including duty cuts on electric vehicles, whiskey, and the movement of professionals—something that is being resisted by Indian stakeholders.

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