India–United Kingdom Free Trade Agreement

The India–United Kingdom free trade agreement is a proposed free trade agreement which began negotiations in January 2022. When completed it will be the first comprehensive free trade agreement that India has signed with a European country; it is expected be the third trade agreement signed by Britain since leaving the European Union negotiated completely anew.

Negotiations
In May 2021, British Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi agreed deeper trade co-operation between the two countries. This “Enhanced Trade Partnership” removed a number of trade barriers and set out the two countries’ intention to work towards a free trade agreement.

India and the UK launched negotiations in January 2022. Johnson declared that the agreement should be completed by Diwali 2022. Despite this, in October 2022, the Secretary of State for International Trade, Kemi Badenoch, said that the Government was no longer working to this deadline. She stated that the Government wanted “to focus on the quality of the deal rather than the speed of the deal”.

By December 2023, the UK and India had reached the 13th round of negotiations, deciding to fast track the agreement in order to complete prior to the elections in both countries the following year. Negotiations between both countries are locked in several issues, one of which is the UK's concerns about agreeing to visas for professionals demanded by India. The thirteenth round of negotiations concluded on 18 December 2023.

The fourteenth round of negotiations began on 10 January 2024. India had been pushing to include social security payments for Indian workers in the UK, Badenoch is reportedly “keen to avoid” this. In March, UK Negotiators flew to India in a “last-gasp attempt to clinch an FTA before the Indian election campaign pauses talks”, according to a UK government official, adding that India believes “they will get more out of Labour on visas and social security”. Shadow Secretary of State for Business and Trade Jonathan Reynolds and Shadow Foreign Secretary David Lammy visited India the month prior to talk with Indian officials. The UK is asking for access in India's government procurement as well as signing a bilateral investment treaty before concluding the FTA. Some British trade officials are increasingly pessimistic about the India deal and see a free trade agreement with the Gulf Cooperation Council as a more realistic deal which can be struck prior to the next election. The fourteenth round of negotiations remain open without a breakthrough on major outstanding issues between the two countries, India became primarily focused on their upcoming general election. Badenoch stated that she would not use the Indian elections as a deadline, just prior to India signing a free trade agreement with the European Free Trade Association, whose members include Iceland, Liechtenstein, Norway, and Switzerland. On 12 March, Modi and British Prime Minister Rishi Sunak agreed to work for an early conclusion of the free trade agreement, during a phone call.

On 15 March, it was announced that negotiations will be "put on ice" until spring after India's election concludes. At the beginning of April, the Indian Ministry of Commerce and Industry placed the completion of India–UK FTA as their priority for 100-day agenda after a new government takes charge. Despite the fourteenth round being declared the prior month, the round remained open by request of India in April 2024; India demanded an exemption from the UK’s planned carbon tax, as well as concessions on visas for Indian workers and, a social security agreement. On 28 May, a high-ranking British delegation had abruptly cancelled its scheduled visit to New Delhi, due to the snap election announcement in the UK a few days prior.

By Spring 2024, the majority of the 26 chapters in the FTA, which include goods, services, investments and intellectual property rights were completed; the remainder of the unresolved issues were rules of origin, duty concessions on electric vehicles, Scotch whisky, social security agreement, carbon border tax, and liberalisation of financial services, in addition to a separate bilateral investment treaty.

Following Modi's re-election on 4 June, which was received positively by UK-based strategic experts and poll watchers, Modi maintained his party's stated objective to conclude the UK-India FTA negotiations within those first 100 days. India had to wait until 4 July for the conclusion of the British general election, in order to resume negotiations for the FTA. On 14 June, Modi and Sunak reaffirmed their commitment to concluding the free trade agreement at a bilateral meeting during the 50th G7 summit. Upon the election of Sir Keir Starmer as British Prime Minister, the two leaders agreed to work towards early conclusion of a mutually beneficial FTA during a phone call.

Comments
Diageo India CEO, Hina Nagarajan stated that the FTA would be one of the greatest milestones for market access in the alcoholic beverage industry in decades if the 150% duty levied on imported Scotch whisky is reduced.