Ministers are resuming trade negotiations with India this week in an effort to secure a multibillion-pound free trade agreement aimed at revitalizing the UK’s sluggish economy.
Business and Trade Secretary Jonathan Reynolds traveled to Delhi on Sunday for discussions with his Indian counterpart, Piyush Goyal, marking the first meeting between the two since Labour’s election victory.
This visit signals the start of the 15th round of trade talks, which had been on hold since May when Rishi Sunak called the UK general election. The previous Conservative governments viewed a trade deal with India—one of the world’s fastest-growing economies with a population of 1.4 billion—as a key Brexit goal. Reynolds emphasized that finalizing the agreement is a “top priority” and that he is “prepared to make tough decisions” to get it done.
“We’ve seen trade secretaries come and go, and while their efforts have been sincere, British businesses have yet to see results,” Reynolds told. “They need a deal that genuinely reduces costs, helps them grow, and gives them access to the massive Indian market. That’s what this government will deliver.”
During his trip, Reynolds and Goyal will visit BT India’s office in Gurugram, while Investment Minister Poppy Gustafsson will engage with businesses in Mumbai and Bengaluru.
Saif Malik, CEO of Standard Chartered, which has operated in India for over 160 years, highlighted the significant benefits of a trade deal. “It could enhance access to India’s growing consumer market and drive collaboration in manufacturing, infrastructure, innovation, and financial services,” he said.
The UK and India, the world’s sixth- and fifth-largest economies, currently have a trade relationship valued at £41 billion. India is projected to become the third-largest global economy by 2028.
However, India has a reputation as a tough negotiator. Prime Minister Narendra Modi’s government took 16 years to finalize a £79 billion agreement with the European Free Trade Association earlier this year. Even Donald Trump recently remarked that Modi was “a much tougher” negotiator than himself.
Previous attempts by Boris Johnson and Liz Truss to meet Diwali deadlines for an agreement failed, while Sunak’s administration came close before talks were paused due to the UK election.
The UK is pushing for reduced tariffs on key exports such as cars and whisky, along with greater access for British lawyers and financial services firms in India. In return, India is seeking streamlined visa processes for its workers in the UK.
One major hurdle is India’s objection to UK business visa holders paying national insurance without being eligible for British pensions or social security benefits.
Additionally, India has requested an exemption from the UK’s planned carbon border adjustment mechanism (CBAM)—a tax on imports of carbon-intensive goods like steel, glass, and fertilizer—arguing that, as a developing nation, it should not be subject to the levy. Any such exemption would be controversial, as the CBAM is intended to curb emissions and protect UK steelmakers.
Ministers have recently promoted British businesses expanding their exports to India, with UK companies selling around £17 billion worth of goods and services to the country in the 12 months leading up to September 2024.
Among them, Shipley-based Radio Design has opened a manufacturing plant in India, while the tech firm marcusevans group has set up global tech operations in Mumbai. Coventry-based ApplianSys, which specializes in internet-based education services, is rolling out a pilot program across nearly 5,000 Indian schools.
Reynolds highlighted the potential of the tech and life sciences sectors, stating that their growth in India “will generate tens of millions of pounds for the UK economy.”
