(Commonwealth_India) India and the UK have revived their free trade discussions, nearly a year after they were paused due to the general elections in both countries. The UK’s Secretary of State for Business and Trade, Jonathan Reynolds, met his Indian counterpart, Piyush Goyal, in New Delhi on Monday to launch the two-day talks. The purpose of the meeting was to move forward with the negotiations and work toward an agreement that is both “balanced, ambitious, and mutually beneficial,” as outlined by Goyal in a post on X (formerly Twitter).
Since the negotiations began in 2022, the two countries have held over a dozen rounds of talks, but they have yet to reach a final agreement. A few key issues have stood in the way of a deal, including the high tariffs India places on Scotch whisky, as well as the UK’s restrictions on visa rules and fees for Indian students and professionals. Despite these challenges, the UK has placed a high priority on reaching a deal, with Reynolds emphasizing that securing an agreement with India is a “top priority” for his government.
The trade talks have taken on added importance, particularly since the Labour Party came to power in the UK. Reynolds expressed optimism about the opportunities that India’s rapidly growing economy offers, with the expectation that India will soon become the world’s third-largest economy. He highlighted that growth would be the guiding principle in their trade negotiations. However, the ministers did not provide a deadline for concluding the talks, despite past attempts by former Prime Ministers Boris Johnson and Liz Truss to set specific timelines.
Donald Trump’s decision as the US President to impose reciprocal tariffs on countries, including India, has intensified the urgency of these discussions for India. The UK is considered an important trading partner for the government of Prime Minister Narendra Modi, especially since it has set an ambitious goal of boosting exports by $1 trillion by the fiscal year 2030. Currently, the trade relationship between India and the UK is worth £41bn ($52bn), and a comprehensive trade deal could unlock significant new opportunities for both countries.
The UK government has identified several key sectors that could benefit from a trade agreement, including advanced manufacturing, clean energy, and professional and trade services. The deal could also provide a boost for British cars, Scotch whisky, and financial services, potentially opening up a multi-billion-dollar market. On the other hand, India is pushing for greater mobility for its working professionals and students to the UK, along with faster visa processing times. One of the key points of contention is the treatment of Indian nationals working temporarily in the UK on business visas. Currently, they are required to pay national insurance but do not qualify for social benefits, and India is seeking concessions on this matter.
At the joint press conference following their meeting, both ministers clarified that immigration was not part of the ongoing trade discussions. Goyal emphasized that India had never raised immigration as an issue in any of its free trade negotiations, and Reynolds clarified that business mobility is a separate matter from immigration.
In addition to the trade talks, Reynolds and Goyal visited the BT office in Gurugram, a city in northern India, to further strengthen the UK’s business ties with India. The UK’s investment minister, Poppy Gustafsson, is also in India, participating in events in the country’s major business hubs, Mumbai and Bengaluru, to foster more investment opportunities.
After years of skepticism surrounding free trade deals, India has recently signed several significant agreements or is engaged in negotiations with multiple countries and economic blocs. For example, in 2023, India finalized a $100bn free trade agreement with the European Free Trade Association, a group of four European countries not part of the European Union. India is also preparing to resume negotiations with the European Union this year, signaling a growing willingness to expand its trade relationships globally.
