Senior officials from India and the United Kingdom are scheduled to meet this month to advance discussions on a proposed free trade agreement (FTA). This development comes after the formation of a new government in the UK, with both nations eager to resolve outstanding issues and finalize the negotiations.

 

The FTA talks, which began in January 2022, had been paused during the election cycles of both countries. The upcoming meeting will mark the 14th round of negotiations. Recently, the UK Prime Minister spoke with the Indian Prime Minister, reaffirming his commitment to concluding an FTA that benefits both nations. Both leaders have agreed to expedite the finalization of a mutually advantageous trade deal.

 

Key issues remain in both the goods and services sectors. Indian industries are advocating for greater access for skilled professionals in IT and healthcare, along with duty-free entry for various goods. On the other side, the UK is pushing for reduced import duties on items such as scotch whiskey, electric vehicles, lamb meat, chocolates, and confectioneries. Additionally, the UK seeks expanded opportunities for its services in India’s telecommunications, legal, and financial sectors.

 

The negotiations also include a bilateral investment treaty (BIT) and cover 26 chapters, encompassing goods, services, investments, and intellectual property rights. Bilateral trade between India and the UK increased to USD 21.34 billion in 2023-24, up from USD 20.36 billion in 2022-23.

 

The Labour Party, which recently won the UK elections, has reiterated its commitment to finalizing the FTA. The new Foreign Secretary of the UK plans to visit India within the first month in office to push forward the negotiations. According to the Global Trade Research Initiative (GTRI), the agreement is nearly finalized, with only minor adjustments needed, such as reducing the number of visas for Indian professionals.

 

GTRI advises that India should focus on addressing the Carbon Border Adjustment Measure (CBAM) and other non-traditional issues like labor, environment, gender, and intellectual property rights in the FTA. Historically, India has been cautious about including these topics due to the domestic policy changes they require. The GTRI report suggests that even if the UK removes tariffs on sectors like textiles, stringent sustainability requirements could impact Indian exports, particularly in labor-intensive industries.

 

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