Prime minister Sir Keir Starmer has announced that talks will restart on the long-awaited UK-India trade deal.
At a meeting with Indian counterpart Narendra Modi at the G20 summit in Rio de Janeiro, Starmer announced that talks would be restarting in the new year.
“Yesterday, we announced plans to relaunch UK-India trade talks. A new trade deal will support jobs and prosperity in the UK – and represent a step forward in our mission to deliver growth and opportunity across the country,” he said in a post on Twitter/X.
According to a statement from Modi’s office, both leaders “underlined the importance of resuming the free trade agreement negotiations at an early date”.
‘Prosperity’
“A new trade deal with India will support jobs and prosperity in the UK – and represent a step forward in our mission to deliver growth and opportunity across our country.”
Talks will also include a new ‘strategic partnership’, as well as discussion on other areas such as security, education and technology.
Business and trade secretary Jonathan Reynolds said he believed that “there is a good deal to be done here that works for both nations”.
According to the Department for Business and Trade (DBT), a deal with India could boost the UK’s trading relationship with India, worth £42bn in the 12 months to June 2024. Currently, UK exports to India are worth £16.6bn.
Old story
Trade experts reacted sceptically to the announcement.
“Two types of trade deal available with India. Unambitious, or none. The failure of successive UK governments to recognise this has been one of the wonders of the post-Brexit period”, said David Henig, director of the UK Trade Policy Project.
A trade agreement between the UK and India has been a long-standing goal of multiple administrations back to the days of Boris Johnson’s time in office. The former PM promised a ‘deal by Diwali’ back in 2022 as part of the post-Brexit ‘Global Britain’ push to diversify UK trade away from the EU.
Since then, multiple PMs and trade ministers have set deadlines, announced negotiations and made commitments on specific provisions, but a deal has yet to be sealed.
Both the UK and Indian general elections pushed the timeline back further, with Starmer’s latest announcement marking the first time that a Labour government will have a shot at negotiating a deal with India.
Contentious issues
The contentious issue of immigration had proven to be a thorny issue, alongside traditional trading issues like intellectual property, market access and trade in services.
Under the premiership of Rishi Sunak, then-home secretary Suella Braverman reportedly infuriated officials in both London and New Delhi when she said that Indian nationals were the largest group of overstaying migrants in the UK.
Current Conservative leader Kemi Badenoch had lowered expectations on a trade deal during her time as DBT head, but later told the Telegraph that she also had blocked the deal over requests from the Indian government.
Former Tory ministerial colleagues later rejected this, telling the Times that Badenoch also wanted a “deal at all costs”.
“The reality was, all the bargaining power was with the Indians and they had more leverage in negotiations than we did,” an anonymous former cabinet member said.