India and Britain launched negotiations for the FTA in January with an aim to conclude talks by Diwali (October 24), but the deadline was missed due to political developments in the UK. There are 26 chapters in the agreement, which include goods, services, investments and intellectual property rights.
UK Secretary of State for International Trade Kemi Badenoch is likely to hold talks with her counterpart Piyush Goyal on bilateral trade and the proposed India-UK free trade agreement (FTA), which could not be sealed by the Diwali deadline, officials have said.
The sixth round of India-UK FTA negotiations is scheduled to begin on December 12 .
In a free trade agreement, both India and UK countries either significantly reduce or eliminate customs duties on the maximum number of goods traded between them. The UK side is demanding duty concessions in the automobile sector.
The bilateral trade between the two countries increased to USD 17.5 billion in 2021-22 compared to USD 13.2 billion in 2020-21. India’s exports stood at USD 10.5 billion in 2021-22, while imports were USD 7 billion.
India’s main exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment and parts, spices, metal products, machinery and instruments, pharma and marine items.
Major imports include precious and semi-precious stones, ores and metal scraps, engineering goods, professional instruments, non-ferrous metals, chemicals and machinery.
The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022.
In the services sector, the UK is one of the largest markets in Europe for Indian IT services. Trade in goods, including passenger vehicles, is one of the areas under the negotiations, which started on January 13, 2022.
Last month, Commerce and Industry Minister Piyush Goyal said the agreement is a high priority for both countries. He added that things are progressing well and it will yield good results.
“We are all very well aware that it was progressing very fast until we had a little bit of a blip because of political happenings in the other country…We have a stable government…in office now (in the UK) and I am already in touch with my (UK) counterpart. We are working together to possibly have an in-person meeting also very soon but our teams are already engaged. Next month, the next round of negotiations are slated to happen,” Goyal had said.
Reduction or elimination of customs duty under the pact would help Indian labour-intensive sectors like textiles, leather, gems and jewellery to boost exports in the UK market. The UK is seeking duty concessions in areas like Scotch whiskey and automobiles.
