NEW DELHI, Feb 23: India and the UK are set to resume negotiations for a proposed free trade agreement (FTA) in New Delhi starting February 24, after a hiatus of more than eight months, according to an official statement.
UK’s Secretary of State for Business and Trade, Jonathan Reynolds, will be present to kick off the negotiations, which include a bilateral meeting with Commerce and Industry Minister Piyush Goyal, the official noted.
The discussions concerning the India-UK FTA initially commenced on January 13, 2022.
As of December 2023, a total of 13 rounds of negotiations had been conducted. The 14th round began on January 10, 2024, but was halted by the UK side in May 2024 due to elections in the UK.
The upcoming discussions aim to build on the progress made thus far and work towards closing the trade deal efficiently, the official added.
This agreement is expected to enhance bilateral trade and investment opportunities.
Typically, such agreements lead to either the elimination or significant reduction of customs duties on most traded goods, along with easing regulations to foster trade in services and investments between the two countries.
The Indian industry is advocating for improved access for its skilled workforce, particularly from sectors such as IT and healthcare, in the UK, alongside demands for tariff-free market access for various goods.
Conversely, the UK is looking for substantial reductions in import duties on goods including scotch whisky, electric vehicles, lamb meat, chocolates, and certain confectionery products.
The UK government is also pursuing increased opportunities for its services within Indian markets in areas like telecommunications, legal services, and financial sectors, encompassing banking and insurance.
Discussions may gain momentum, particularly after Finance Minister Nirmala Sitharaman proposed increasing the foreign investment cap to 100 percent in the insurance domain as part of broader financial sector reforms.
During the presentation of the Union Budget 2025-26, the Finance Minister announced that the foreign direct investment (FDI) limit for insurance would rise from 74 percent to 100 percent.
Additionally, both countries are negotiating a bilateral investment treaty (BIT).
The agreement includes 26 chapters covering various areas such as goods, services, investments, and intellectual property rights.
Bilateral trade between India and the UK rose to USD 21.34 billion in 2023-24, up from USD 20.36 billion in 2022-23, with the average duty on goods imported from India into the UK standing at 4.2 percent.
According to the economic think tank GTRI, commodities such as textiles, apparel (including shirts, trousers, women’s dresses, and bed linen), footwear, carpets, cars, marine products, grapes, and mangoes are anticipated to benefit from the agreement, as these items currently face relatively low to moderate tariffs in the UK.
For instance, duties on yarn and fabric are set at 4 percent, while tariffs on items like shirts, trousers, women’s dresses, and bed linen range between 10 percent and 12 percent. Handbags and trunks face an 8 percent tariff, with footwear duties varying from 4 percent to 16 percent.
Furthermore, the report indicates that UK exporters would benefit immediately when India eliminates high tariffs on a range of British products.
For example, the current tariff on cars is 100 percent, while Scotch whisky and wines incur a 150 percent tariff. The average tariff level in India on goods imported from the UK is 14.6 percent.
In 2022-23, the UK exported USD 2.7 billion worth of precious metals and USD 374 million worth of Scotch and other alcoholic beverages to India.
The United Kingdom ranks as the sixth largest investor in India, contributing USD 35.3 billion in foreign direct investment (FDI) from April 2000 to September 2024. (PTI)
