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India – UK Free Trade Agreement: A Pause to an Ambitious Outcome

With India’s growing consumer market, young workforce, and commitment to economic reform, the UK is presented with an opportunity to enhance its market access in India.

-- Ragamalika Muraleedharan

On March 12th, 2024, 10 Downing Street received a call from the Indian Prime Minister. The conversation between the Prime Ministers was about the progress of the proposed India-UK Free Trade Agreement (FTA), which has garnered significant attention since January 2022, representing a potential milestone in bilateral economic relations. As both nations seek to deepen their trade ties amidst evolving global dynamics, media from both countries have stated that this agreement holds promise for bolstering economic growth, enhancing investment flows, and fostering closer diplomatic cooperation. However, amidst these opportunities are numerous challenges that warrant careful examination.

With India’s growing consumer market, young workforce, and commitment to economic reform, the UK is presented with an opportunity to enhance its market access in India. This means a diverse range of goods and services being exchanged, benefiting businesses and consumers in both countries.

However, the 14-round dialogues have led to the UK wanting India to significantly reduce tariffs on UK exports such as food, cars, and whisky that can currently be as high as 150 percent. Along with this is the market access in areas including digital and data, and legal services (subject to regulatory changes).

In fairness, what can India expect in return? India’s demands and concerns have been along the lines of giving Indian workers in the UK eligibility for UK pensions and social security benefits as they pay national insurance. It is also expected that the UK government will give Indian businesses access to UK financing and expertise in green and sustainable infrastructure projects. This means Indian businesses can also raise funds through the London market via? listings and bond issuance. It also enables Indian businesses like automobiles, textiles, pharmaceuticals, food and beverage, machinery, chemicals, and agriculture to have supplies in the UK. If we look into the reasoning behind this access, a key motive emerges as the UK is keen to reduce its dependence on China. Will this trade agreement mean India will challenge China’s big presence in the UK?

Beyond economic considerations also lies a strategic partnership India is trying to hold with the UK government. Well, for India, the FTA expectations are not just from the current Prime Minister but from the UK’s Labour Party as well. Why? As mentioned before India is expecting favourable terms regarding visas and social security for Indians working in the UK. The dialogues from the Indian side do apprehend that Modi’s administration may await the UK Labour Government in 2025.

However, the key challenge here is that the Indian election is due in April-May 2024, and this has already paused FTA talks. Before the businessmen and bureaucrats could get the final words from both Prime Ministers, the focus shifted to elections. The Guardian wrote that the “two sides had come very close to finalising a deal, but UK officials said on Friday that India had not moved enough on services and investment.” Well, for a bilateral trade – currently worth around GBP 38.1 billion a year as per official statistics; India being a tough negotiator will keep in mind its national interests and is expected to play the role of a protectionist. 

What can we expect out of Indian elections and will the change in political party affect FTA negotiations? In case the Labour Party were to come to power in the UK elections that are to happen in 2024, would they be favourable to India’s demands?

While policymakers and analysts are deducing answers to these questions, as the public, we can only generalise the answer to this statement: The success of the India-UK FTA will hinge on the ability of both countries to overcome these challenges through constructive dialogue and sustained cooperation.


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