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India, UK to resume FTA talks after one-year gap
British trade minister Jonathan Reynolds is expected to meet his Indian counterpart Piyush Goyal in New Delhi on February 24 before the resumption of talks on the FTA
India and the UK will resume negotiations this week for a free trade agreement (FTA) after a hiatus of almost a year, with British trade minister Jonathan Reynolds travelling to New Delhi to meet his Indian counterpart Piyush Goyal.
After launching the negotiations in January 2022, the two sides held 14 rounds of talks before the process was suspended in May 2024, ahead of general elections in both countries. The two sides had initially set an ambitious target of concluding the negotiations by October 2022 but have faced difficulties in closing the gap on issues such as tariffs, market access and mobility of professionals.
Reynolds is expected to meet Goyal in New Delhi on February 24 before the resumption of talks on the FTA, an official said on condition of anonymity. Goyal and the UK delegation led by Reynolds will discuss various matters pertaining to trade and economy, he said.
“On February 25, the 14th round of talks, which was suspended in May last year, will be resumed and the two partners may move to the 15th negotiating round starting from Tuesday,” the official said.
The British side, however, is looking at the upcoming discussions as a “relaunch” of the negotiations, people familiar with the matter said. This is because the Labour government led by Prime Minister Keir Starmer wants to adopt a different approach than that of the previous Conservative Party government and have a fresh look at some aspects of the trade deal.
“The UK is seeking a new strategic partnership with India, which includes a trade deal, and deeper cooperation in areas such as security, education, technology and climate change,” the official cited above said.
Following a meeting between Prime Minister Narendra Modi and Starmer on the margins of the G20 Summit in Brazil last November, the two leaders had announced the resumption of talks in 2025.
While the two sides made considerable progress in some areas of the FTA negotiations, there were difficulties on key issues such as mobility of Indian students and professionals to deliver services, Indian tariffs on alcoholic beverages and electric vehicles, and market access for British financial and professional services that currently account for 56% of exports to India. India is also eyeing greater market access for its telecommunications and financial services.
Another issue that has cropped up over the past year is the UK’s plan to introduce a carbon border tax, or the Carbon Border Adjustment Mechanism (CBAM), by January 2027, the people said. India has already opposed the European Union’s plan to introduce a similar tax by 2026.
Earlier, talks were affected by political instability in the UK’s former Conservative Party government. While talks continued under former premier Rishi Sunak, the two partners couldn’t resolve issues such as a cut in import duties on automobiles and scotch whisky and an easier business visa regime.
Mobility for Indian professionals continues to be a tricky subject for Britain’s Labour government, which has talked about a tougher stand on migration in the face of pressure on the matter from the right-wing forces such as the Reform UK party.
Officials said the road ahead could be “bumpy” as the Labour government might revisit certain settled matters. The two governments, however, are hopeful of a mutually beneficial deal soon, they said.
India has accorded “priority country” status to the UK, expecting a threefold rise in Indian exports to Britain by 2030 that will help achieve New Delhi’s ambitious merchandise export target of $1 trillion by FY30.
India-UK trade was worth $21.33 billion in 2023-24. India exported merchandise worth $12.98 billion to the UK in 2023-24 and imported goods worth $8.41 billion in the same period. The UK is among India’s top five export destinations. According to UK data, India was Britain’s 12th largest trading partner in 2023.
