While the IndiaUK FTA holds promise, India must approach negotiations strategically to secure favorable terms while safeguarding domestic interests
INDIA and the United Kingdom have resumed negotiations on a Free Trade Agreement (FTA) after delays caused by elections in both nations. UK Business and Trade Secretary Jonathan Reynolds recently met India’s Commerce Minister Piyush Goyal in New Delhi to explore investment opportunities in key sectors such as advanced manufacturing, clean energy, and financial services.
The discussions, which originally began under the UK’s Conservative government in 2022, have faced hurdles, particularly over visa regulations for Indian professionals and social security issues. Despite these challenges, both sides remain committed to finalising an agreement that could significantly boost economic ties. With India projected to become the world’s third-largest economy by 2028, the trade relationship, currently valued at £41 billion annually and supporting over 600,000 jobs, holds immense potential. Meanwhile, Alastair King, the Lord Mayor of London, has urged British businesses to increase investments in emerging economies like India. He emphasised the importance of UK financial and legal firms engaging in global markets despite economic setbacks caused by Brexit, the Covid-19 pandemic, and financial instability at home. He pointed to India’s improving infrastructure and business climate as strong incentives for investment. His call for greater engagement aligns with ongoing FTA talks, though key issues, such as social security payments and work visa policies, remain unresolved. For India, negotiating a balanced FTA requires learning from past experiences. Agreements with Asean and Japan led to a surge in imports but did not significantly boost Indian exports. This time, India must ensure fair market access, particularly in IT services, pharmaceuticals, textiles, and food processing. While the UK seeks greater access to India’s financial and professional services sector, India must push for reciprocal benefits for its skilled workforce. Another concern is trade deflection due to weak rules of origin, as seen in the India-Asean FTA, where third-country goods entered through partner nations, undermining local industry. India must insist on stricter regulations to prevent the UK from becoming a gateway for goods from non-FTA countries. Additionally, ensuring professional mobility remains critical. India has struggled to secure favourable visa conditions in past FTAs and must now push for relaxed norms and mutual recognition of qualifications to benefit its workforce. Agriculture and dairy present further challenges. India must protect its farmers from an influx of cheaper imports while leveraging opportunities to expand exports in tea, spices, and organic products. Investment protection mechanisms also require careful negotiation, as investor-state dispute resolution clauses could limit India’s regulatory control. Tariff reductions should be phased and include safeguards to prevent market disruption. Intellectual property rights (IPR) provisions must also be balanced — India should resist stricter norms that could harm its pharmaceutical industry while ensuring better access for its drug exports.