India to resume FTA talks with ‘priority country’ UK in 2025: Centre
Britain is keen on an FTA with India because this could assure it of the supply of food and other products amid geo-political turbulence.
India on Wednesday accorded “priority country” status to the United Kingdom after the two countries agreed to resume negotiations for a free trade agreement (FTA), which could lead to a three-fold rise in Indian exports to the UK by 2030 and help in achieving New Delhi’s ambitious $1 trillion merchandise export target by FY30.
“Subsequent to the meeting between Prime Minister Shri Narendra Modi and the Prime Minister of the United Kingdom H.E. Sir Keir Starmer on the sidelines of the G-20 Summit in Rio de Janeiro, Brazil, we welcome the announcement by the UK to relaunch the India-UK Free Trade talks in the new year,” a statement from India’s commerce ministry said. The talks were suspended in May after they entered the 14th round in January this year.
Britain is keen on an FTA with India because this could assure it of the supply of food and other products amid geo-political turbulence, which, in turn, will keep inflation under control, two officials aware of FTA negotiations said on condition of anonymity. “London’s interest in the Indian market can be assessed through latest trade data. UK’s exports to India jumped over 30.5% in first half of 2024-25 to $4.22 billion as compared to $3.23 billion in the corresponding period of FY24,” one of them added.
India’s exports to the UK also witnessed a good growth of 12.38% to $7.32 billion in the first six months of 2024-25 as against $6.51 billion in the same period of 2023-24. “India’s trade relationship with the United Kingdom continues to grow steadily, showcasing immense potential for deeper collaboration and strategic engagement,” the ministry’s statement added. India exported petroleum products, machinery, precious stones, pharmaceuticals, apparels, chemicals and iron and steel to the UK.
“India-UK FTA talks, initiated in early 2022 by Prime Ministers of the two countries (Narendra Modi and Boris Johnson then) saw several political changes at the top in the United Kingdom that prolonged negotiations,” a second official said. The India-UK FTA talks started on January 13, 2022 and progressed fast. The two partners concluded five rounds of talks by July 29, 2022 and former UK premier Johnson hoped to ink the deal by Diwali in October 2022. However, the political instability in the UK put a brake on its progress.
While the talks resumed after the Rishi Sunak government came to power, the two partners could not resolve issues such as reduction in import duties on automobiles and scotch whisky, and granting easier business visas. Officials mentioned above said the road ahead is still “bumpy” as the new Labour government in the UK may revisit other settled matters apart from issues pertaining to automobiles, scotch whisky and business mobility.
The two governments are, however, hopeful of a mutually beneficial deal soon. “Noting the importance for securing a balanced, mutually beneficial and forward-looking Free Trade Agreement, India looks forward to closely working with the UK’s negotiating team to address remaining issues to mutual satisfaction,” the commerce ministry said in the statement.
The dates for the FTA talk in early 2025 would be finalised through diplomatic channels at an early date, it added. “The FTA talks would resume the discussions from the progress achieved previously and seek to bridge the gaps for expeditiously closing the trade deal.”
The UK is among India’s top 10 trade partners. According to UK data, India was Britain’s 12th largest trading partner in 2023.
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