“This will be a path-breaking free trade agreement,” Goyal said, expressing confidence that the deal could boost merchandise trade between the two countries two to three times over the next ten years. Bilateral trade in goods and services between India and the UK currently stands at £41 billion (₹4.51 trillion) for the 12 months ending September 2024, according to British government estimates accessed by Reuters.

The talks, which were paused in March 2023 ahead of elections in both countries, have gained momentum following discussions between Prime Minister Narendra Modi and his British counterpart Keir Starmer on the sidelines of the G20 Summit in Rio de Janeiro in November 2024.

UK’s business and trade minister Jonathan Reynolds with Commerce Minister Piyush Goyal at the National Crafts Museum. (X@PiyushGoyal)

Key sticking points

While both sides are optimistic, several sticking points remain. India has long sought easier visa norms for its professionals and businesses to work in the UK, while Britain has pushed for lower agricultural tariffs and greater access to India’s dairy market.

Goyal batted for the need for a more liberal visa regime to facilitate smoother movement of skilled professionals and businesses between the two nations. He said that easier visa norms would play a crucial role in promoting bilateral trade and investments: “We have as part of the FTA opened up each other’s services sector while protecting the sensitivities that each country has. This will open up new opportunities, and for all of this, business visas will be required and linked to investments and the services being opened up,” Goyal said, adding, “If we both wish to expand our trade and investments, obviously we have to be faster and more liberal in our issuance of visas.”

Goyal clarified that India has “never ever” discussed immigration in any free trade agreement negotiations. He pointed out that Indian students and professionals often travel to countries such as the US, UK, Canada, New Zealand, and Australia for education and work. While these countries offer short-term business work visas to gain practical experience, it is not linked to immigration. Reynolds echoed this sentiment, saying that immigration is being addressed as a separate issue outside the trade talks.

Another key hurdle is India’s steep import duty on British whisky, which was recently reduced to 100% from 150% following criticism from US President Trump over “unfair” levies in the Indian market.

The broader vision 

The proposed FTA is expected to open up new opportunities in services, investments, and merchandise trade. Goyal said that both countries are opening up their services sectors “in a big way” while protecting each other’s sensitivities.

Reynolds described the trade deal as a “top priority” for the UK government, which came to power in July 2023 under the Labour Party. He also noted that the UK is keen to attract Indian investments, with UK Investment Minister Poppy Gustafsson scheduled to meet investors in Mumbai and Bengaluru to promote bilateral economic ties.

In addition to the FTA, both nations are discussing a separate treaty on social security to further strengthen their economic partnership.

India has been actively pursuing trade agreements with key partners and has signed deals with the UAE, Australia, and the European Free Trade Association (EFTA) comprising Switzerland, Norway, Iceland, and Liechtenstein.

(With inputs from Reuters and PTI)