A UK-India trade deal is 90% complete, the government told business leaders yesterday.
It is thought that the stumbling block of labour mobility, including visas for Indian workers, has largely been resolved.
A UK government source told the Guardian, “we are nearly there”.
“We are as close as we’ve ever been, but conversations at the political level cut both ways.”
Trump impetus
An Indian government official also told the FT that the talks were going “very well” and could be completed in a matter of months.
They said that US president Donald Trump’s tariff war had given fresh impetus to India’s negotiations for deals with the UK and EU, among others.
“Our relationship with India is long-standing and broad and I’m delighted with the progress made throughout this dialogue to develop it further,” said UK chancellor Rachel Reeves.
Reeves told business leaders yesterday that the UK would continue to pursue closer trade ties with the EU, Gulf states, South Korea and Switzerland as part of its bid to mitigate the impact of Trump’s reciprocal tariffs.
“There was a general sense of calm, while exercising prudence and a need to monitor developments closely,” an executive that attended yesterday’s meeting with the chancellor said.
Welcome boost
The remaining outstanding issues are around whisky, cars and pharmaceuticals, it has been reported.
These sectors would be expected to welcome a deal with India given the current uncertainty in the US market, which all three currently export heavily to. Scotch whisky exports to India in particular could see dramatic tariff reductions as a result of the deal.
Reeves met India’s finance minister, Nirmala Sitharamam, yesterday to discuss both the free trade agreement and a separate bilateral investment treaty. The treaty would introduce legal protections for investments between the two countries.
Ministers announced a package of £128m in export deals and investments with India after Reeves’ visit. This, alongside other deals recently completed, valued at £271m, has led the UK government to claim that £400m of “trade and investment wins” have been secured.
“In a changing world, it is imperative we go further and faster to kickstart economic growth,” said Reeves.
“We have listened to British businesses, which is why we’re negotiating trade deals with countries across the world, including India, so we can support them and put more money in people’s pockets as part of our Plan for Change.”
Lengthy negotiations
The UK and India started negotiating a free trade agreement in January 2022, with then-prime minister Boris Johnson claiming a deal could be secured by Diwali of that year.
Disputes over visas and social security payments for Indians working in the UK have proved complicated to resolve, while the UK has been vying for enhanced access to India’s advanced manufacturing, clean energy and various service sectors.
Increased access to India’s 1.4 billion-person economy would be viewed as the UK’s most significant post-Brexit free trade agreement to date.
In the four quarters up to the end of Q3 2024, UK-India trade was valued at £40.9bn, making India the UK’s 11th largest trading partner, according to government figures.
Trump watch: How India has been affected
As part of Trump’s ‘liberation day’ announcement of reciprocal tariffs, 26% duties were introduced on Indian exports to the US, though these have been reduced to 10% for 90 days as part of the ‘pause’ on tariffs announced yesterday.
India is among the countries now seeking a quick deal with the Trump administration to reduce tariffs and improve bilateral trade. Talks began in February for the first phase of a trade deal to be concluded later this year, according to Reuters. It is thought that an agreement could increase the value of US-India trade to US$500bn by 2030.
India’s trade ministry this week said that the country’s manufacturers, like their US counterparts, had suffered from China’s trade practices in recent years and that New Delhi would increase scrutiny on imports to spot any possible dumping of goods by China.
China is India’s fourth largest export partner, according to the India Brand Equity Foundation. The US is the country’s third biggest partner.
