India and the UK on Monday resumed negotiations for a free-trade agreement (FTA) after an eight-month pause, with the two sides aiming for a threefold increase in bilateral merchandise trade through a “mutually beneficial and a forward-looking” deal by resolving tariff and non-tariff issues while protecting each other’s “sensitivities”, ministers of the two countries said.
In a precursor to the formal resumption of FTA negotiations, which were left suspended after the 14th round of negotiations because of elections in the UK and a change in the government there, commerce minister Piyush Goyal and British business and trade secretary Jonathan Reynolds met on Monday.
“The strengthening of the trading relationship between our two countries has the potential to unlock opportunities for business and consumers across both our nations and build further on our already deep ties,” the two countries said in a joint statement after the ministerial meeting in New Delhi.
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Goyal said an FTA deal will give “huge opportunities” to businesses and people to grow in both countries, and that the deal would help to boost bilateral merchandise trade between the two countries from the current $20 billion “to probably two or 3X” in the next 10 years.
While restarting trade talks, the two countries directed their negotiators “to work together to resolve the outstanding issues in the agreement to ensure a fair and equitable trade deal” for shared success.
FTA talks between India and the UK started on January 13, 2022, and initially progressed fast. But they got stuck over key issues including India’s higher tariffs on automobiles and Scotch whiskies, and British sensitivity over immigration issues.
The two ministers on Monday made it clear that tariffs on individual items can be negotiated for mutual gain and that the proposed FTA does not involve immigration.
They, however, agreed to further ease visa norms for business mobility to boost bilateral trade and investments.
Replying to specific questions about whether the UK was willing to increase the number of Indian worker visas as part of an FTA, and if visas for Indian workers are a key part of India’s ask, Goyal said there was “some misunderstanding along the way” because, in his six years of negotiating FTAs with several countries, immigration has never been a part of the trade deal.
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“India has never, ever discussed immigration in any free trade agreement negotiations,” he said, stressing that immigration and business mobility are two different things.
Responding to the question, Reynolds said: “We welcome the huge and important relationship we have with people from India coming to the UK, where that’s the study, where that is to be part of businesses. And, obviously, business mobility is a separate issue to immigration.”
Reynolds added: “As a services-based economy, business mobility is an ask from the UK in trade negotiations… on tariffs, we’ll not get into the individual details.”
Without naming any country, Goyal said that India charges high tariffs on some items to protect its businesses and industries from unfair trade practices.
“Many of the tariffs that India has are really to protect us from non-market economies, non-transparent economies, or economies which are known for predatory pricing or dumping of goods,” he said.
The commerce minister said that India was open to reducing tariffs bilaterally under the proposed FTA with the UK for mutual gain.
“Between the United Kingdom and India, we are much more flexible,” he said, adding that the two countries can significantly reduce tariffs, “to make business more competitive”.
Through the negotiations, while India’s key ask has been easier business mobility for the services trade, the UK has sought significant reductions in import duties on goods such as Scotch whiskey, electric vehicles, lamb meat, chocolates, and other confectionary items.
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The UK is also keen on access to India’s telecommunications, banking, insurance, legal and financial services.
The ministers declined to give any definite timelines for the negotiations. Reynolds said securing the deal with India is a “top” priority for the UK. Goyal added: “We will have speed, but not haste,” and said that it is “never too early” or too late” to conclude a good agreement.
He said that, along with the FTA negotiations, both partners would also be negotiating a bilateral investment treaty (BIT). To be sure, a Double Contribution Convention pact is also in the works.
“All three are in parallel and conjoint with each other,” Goyal said.
The India-UK bilateral trade was $21.34 billion in 2023-24. The UK is the sixth largest investor in India contributing $35.3 billion foreign direct investment between April 2000 and September 2024.