Finance Minister Nirmala Sitharaman will visit the UK for a three-day trip starting April 8, where issues related to the Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT) are expected to be discussed during the scheduled meetings.
The Finance Minister’s key engagement in the UK will be the India-UK Economic and Financial Dialogue, with other engagements also scheduled. Sitharaman is expected to hold a bilateral meeting with the UK’s Chancellor of the Exchequer, Rachel Reeves, as well as with other ministers.
India and the UK resumed their FTA negotiations after a gap of eight months in February. The gap was due to the elections in both countries. Along with the FTA, both countries are also negotiating a BIT. For the formal resumption of talks on FTA, Secretary of State for the Department for Business and Trade of the United Kingdom Jonathan Reynolds visited Delhi. After the meetings of top trade leaders of the UK and India, officials are engaging to take the discussions forward.
The India-UK FTA talks were launched in January 2022. Since then, 14 rounds of formal negotiations have taken place. The intensity of engagement with the UK is much more than with any other partner India is negotiating an FTA with.
For a similar FTA with the European Union, a deadline of 2025-end has been set, while the UK FTA has no target date. The FTAs assume significance as the world deals with the tariff announcements by US President Donald Trump. Every major economy that will be intacted by these tariffs are looking for new trade partnerships that keep trade flows intact.
India-UK FTA deals with 26 chapters or policy areas. Majority of chapters have been closed or are in an advanced stage of negotiations, officials say.
In BIT also India has shown flexibility in moving away from the model draft. The investment pact signed with UAE demonstrates this. The government is also working a new model BIT.
Apart from BIT and FTA, Double Contribution Convention Agreement is also being discussed that will deal social security contrinutions of temporary workers of both the countries in each other geographies.
While FTA talks were suspended, India has on its own brought down import duties on cars, motorcycles and even select bourbon whiskey which is produced in the US. A proposal has also been moved in the Parliament to increase foreign direct investment limit in insurance to100%.
Lower duties in cars and liberalisation in insurance addresses key demand of the UK. UK’s stand on India’s demands for freer movement of professionals and temporary workers still remains unclear.
