United Kingdom Prime Minister Keir Starmer has announced plans to relaunch the Free Trade Agreement (FTA) talks with India early next year, following a bilateral meeting with Prime Minister Narendra Modi on the sidelines of the G20 Summit in Brazil. The announcement demonstrates a renewed push to deepen ties between the two nations across key sectors.
UK-India Trade Talks To Re-Launch In 2025
Why In News
- United Kingdom Prime Minister Keir Starmer has announced plans to relaunch the Free Trade Agreement (FTA) talks with India early next year, following a bilateral meeting with Prime Minister Narendra Modi on the sidelines of the G20 Summit in Brazil. The announcement demonstrates a renewed push to deepen ties between the two nations across key sectors.
What Is Free Trade Agreements?
- Free Trade Agreements (FTAs) are formal arrangements between two or more countries or trading blocs aimed at promoting economic integration by reducing or eliminating barriers to trade.
- These barriers typically include customs tariffs, quotas, and non-tariff barriers, facilitating a freer flow of goods and services between the signatory parties. FTAs generally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.).
- FTAs may also include several other areas such as investment, competition policy, and government procurement etc.
India-UK Trade Talks
- It should be mentioned here that India and the UK have been negotiating a Free Trade Agreement since January 2022, with talks paused during general elections in both countries earlier this year. According to the latest statistics, the bilateral trade relationship was worth GBP 42 billion in the 12 months to June. An FTA is expected to significantly boost the figure. The Labour Party government in the UK is keen to highlight a trade friendly message as a means to deliver a strong economy at home.
Current State Of Trade And Economic Cooperation
- As of 2023-24, trade between the UK and India reached a substantial USD 21.34 billion, showing significant growth from the previous year. UK exports to India alone accounted for USD 16.6 billion. This robust trade relationship forms the foundation for the FTA discussions, with both governments eager to build on these figures.
- The new FTA is expected to enhance market access across a variety of sectors. British firms are particularly keen on reducing Indian tariffs on key exports such as scotch whiskey, electric vehicles, lamb, and confectionery, while India seeks greater access to the UK’s service sectors, including telecommunications, legal services, and financial services.
- As UK Business and Trade Secretary Jonathan Reynolds noted, “India is a vital trading partner for the UK. We believe there is a good deal to be done here that works for both nations.” By eliminating tariffs and opening up investment opportunities, the FTA could create new jobs and economic growth on both sides.
Features
- Market Access for Goods and Services: India has long advocated for greater access for skilled professionals in sectors such as IT and healthcare. Additionally, it seeks zero-duty access for a range of goods, including textiles and pharmaceuticals. The UK, on the other hand, is focused on reducing Indian tariffs on its exports, including luxury goods like scotch whiskey, as well as agricultural products such as lamb and chocolates.
- Investment and Intellectual Property: Another critical aspect of the FTA involves the negotiation of a Bilateral Investment Treaty (BIT), which would cover areas such as goods, services, investments, and intellectual property rights. Both nations are keen on fostering deeper investment ties, with UK businesses already supporting over 600,000 jobs in India.
- Labour, Environment, and Sustainability: One of the more contentious issues in the talks has been India’s resistance to including labour and environmental standards in the agreement. The UK has pushed for commitments in these areas, but India is cautious about incorporating policies that could require significant domestic changes. This could impact sectors such as textiles, which are crucial to both economies, especially given the UK’s focus on sustainability and fair labour practices.
- Visas and Immigration: Another potential hurdle is the negotiation around visa provisions for Indian professionals. While India seeks greater opportunities for its citizens to work in the UK, the British government is keen to ensure that visa schemes are manageable and do not lead to excessive migration. Both sides will need to strike a balance that satisfies their respective domestic priorities.
- Potential for Growth and Cooperation : The FTA presents a vast array of opportunities for both India and the UK. For India, access to the UK’s advanced technology and service sectors could be transformative, especially in areas such as fintech, legal services, and education. Meanwhile, the UK stands to benefit from expanded access to India’s growing consumer market and its burgeoning sectors, such as renewable energy and digital technology.
Relaunch Of The UK-India FTA
- The relaunch of the UK-India FTA in early 2025 is a significant moment in the evolving relationship between these two nations. As both sides work toward the finalization of the deal, the UK and India stand to benefit from a closer, more robust economic partnership—one that could shape the future of trade between the two countries for years to come.
- “Whether it’s lowering Indian tariffs to help British firms export to this dynamic market or boosting investment which already supports over 600,000 jobs across both countries, striking a deal is important to deliver this Government’s core mission of driving economic growth,” he said.
- The Labour government has been negotiating with Switzerland, South Korea and the Gulf Cooperation Council since their election victory in July.
- The UK will also join trade talks for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in mid-December.
