India UK Free Trade Agreement (FTA)
On February 24, Union Minister of Commerce & Industry, Piyush Goyal, announced that India and the United Kingdom have agreed to restart negotiations for a India UK Free Trade Agreement (FTA). This decision marks an important step in strengthening trade relations between the two countries. The negotiations had been stalled for almost a year, as discussions were put on hold in May 2024. At that time, the UK was preparing for its general elections, which shifted the government’s focus away from trade talks. Due to political changes and election-related priorities in the UK, both nations had to temporarily pause their efforts to finalize the agreement. Now, with the elections over and a stable government in place, India and the UK are ready to resume discussions and work toward a mutually beneficial trade deal.
Union Minister of Commerce & Industry, Piyush Goyal, emphasized the importance of restarting Free Trade Agreement (FTA) negotiations after his meeting with UK Business and Trade Secretary, Jonathan Reynolds. Reynolds is currently on a three-day visit to India, during which both sides are actively working to strengthen economic ties and trade partnerships.
While speaking at an event, Goyal stated that “all options are on the table,” indicating that India and the UK are open to exploring various possibilities to make progress in their trade relationship. He further explained that discussions are not limited to just the FTA but also include two other significant agreements—the Bilateral Investment Treaty (BIT) and the Double Contribution Convention Agreement. These three agreements are being negotiated simultaneously, and they are interconnected, meaning that progress in one area can influence decisions in the other two.
Jonathan Reynolds also shared his perspective on the FTA negotiations, highlighting the strategic importance of India-UK relations. He acknowledged India as a crucial partner for the UK, especially in today’s world, which is becoming increasingly complex and unpredictable due to global economic shifts and geopolitical challenges. Reynolds confirmed that both countries have officially resumed FTA negotiations, and the goal is to secure a trade agreement that benefits both nations equally. Through these discussions, the UK aims to strengthen its economic relationship with India while ensuring that the deal aligns with the interests of businesses and investors from both sides.
During the discussions, Piyush Goyal emphasized the need to strike a balance between efficiency and thoroughness in the negotiation process. He explained that while it is important to move forward quickly, rushing into an agreement without careful consideration could lead to complications. “We will have speed but not haste,” he stated, highlighting that both sides want to ensure a well-structured and beneficial trade deal rather than pushing for a premature conclusion.
Jonathan Reynolds echoed Goyal’s views, stating that for the UK, the priority is to secure a high-quality trade agreement rather than simply finalizing it quickly. He acknowledged that while speed is important, what matters most is that the deal is well-crafted and serves the best interests of both nations. However, he also noted that there is a strong sense of urgency, and the UK government considers the FTA a top priority. Reynolds reassured that the trade negotiations have full backing from the UK Prime Minister and key cabinet members, signaling the government’s commitment to finalizing the deal.
India and the UK first began FTA negotiations in January 2022 under the previous Conservative-led British government. Despite the change in leadership, the newly elected Labour Party government has also expressed its willingness to continue working towards a trade agreement. This shows that both nations see long-term economic benefits in strengthening their trade ties.
The proposed Free Trade Agreement consists of 26 chapters covering a wide range of topics, including trade in goods, services, investment policies, and intellectual property rights. These chapters are designed to ensure comprehensive economic cooperation and create opportunities for businesses in both countries.
Before talks were paused in May 2024, India had been negotiating some key unresolved issues with the previous Conservative-led UK government. Some of the major sticking points included:
- Rules of Origin – India and the UK were discussing how much of a product needs to be manufactured in either country to qualify for tariff-free access under the trade agreement.
- Tariff Concessions on Electric Vehicles (EVs) – The UK wanted India to lower import duties on electric vehicles to make it easier for British automakers to sell EVs in the Indian market. However, India was cautious about this, as it wanted to protect its own growing EV industry.
- Regulations on Services – India was pushing for better access to the UK’s services sector, particularly in areas like IT, finance, and consulting. One of the key demands from New Delhi was easier mobility norms, which would allow Indian professionals to work in the UK with fewer visa restrictions.
So far, 13 rounds of negotiations have been completed, and the 14th round is currently underway. With both governments now back at the table and determined to move forward, there is renewed hope that an agreement can be reached in the near future.
