UK yet to set up negotiating team to resume free trade deal talks with India
Money Control | 5 September 2024
UK yet to set up negotiating team to resume free trade deal talks with India
by Ishaan Gera
The new government in the United Kingdom is yet to set up a negotiating team to resume the the 14th round of free trade agreement talks with its Indian counterpart, but people familiar with the development shared with Moneycontrol that the process will be completed soon.
The UK-India Free Trade Agreement (FTA), which will give Britain access to the Indian markets and open up the British market to Indian businesses, began in January 2024, with heightened expectations that it will be in place before the two countries go to polls. The two sides concluded 13 rounds of negotiations till 2023 but the 14th round of talks were stalled inclusively because of the polls.
India held its general elections in May and the UK in July. While India voted the incumbent regime back to power, a new government has been elected in the UK. The FTA negotiations have yet to restart as the negotiating team on the UK side has not been constituted till now, said the people familiar with the developments. “As the new government recently took charge, a negotiating team is yet to be constituted. But the process will be completed soon,” said one of them.
The negotiations were scheduled to resume in July, after the new governments were elected in both the countries, but the process has been delayed since.
In the UK, there was a change of guard, with the Conservatives losing to the Labour Party, which had been out of power for 14 years. In his first visit to India in July, UK Foreign Secretary David Lammy noted that the country was keen to cement the FTA with India.
“Our Free Trade Agreement negotiations are the floor, not the ceiling, of our ambitions to unlock our shared potential and deliver growth from Bengaluru to Birmingham. We have shared interests in the green transition, new technologies, economic security and global security,” Lammy said.
The FTA with India was part of the manifesto for both the parties in the UK elections.
While the two nations have closed negotiations on most issues, some points of concern remain unresolved. The Indian team last visited the UK in April to iron out some issues.
An issue of concern has been the localisation norms for British automakers to avail of benefits. Import of whiskey from the Britain is also an issue that needs to be ironed out.
More cooperation
In addition to the FTA, the two countries have been cooperating on research. On his visit to India, British foreign secretary Lamy announced the Technology and Security Initiative for collaboration on issues like critical minerals, advanced materials, health technology, artificial intelligence, and semiconductors.
The initiative is part of the UK-India 2030 roadmap signed between the two countries in 2021.
More recently, India and the UK signed the UK-India Infrastructure Financing Bridge. Niti Aayog CEO BVR Subrahmanyam, who attended the signing in the UK on September 4, noted that the trade deal between the two countries was within touching distance.
Trade ties
The UK’s share of India’s trade has reduced over the last decade. In FY24, the countries traded goods worth $21.3 billion, or 1.9 percent of India’s total trade, compared with 2.1 percent in FY14.
While India’s overall trade grew at a compounded annual growth rate of 3.8 percent between FY14 and FY24, trade with the UK grew slower at 3 percent per annum.