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India-UK Free Trade Agreement

5th July, 2024 International Relations

India-UK Free Trade Agreement

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  • Britain’s Labour Party has won a landslide election victory and this might have potential implications on the India-UK Free Trade Agreement (FTA) negotiations.
  • Labour's win might provide the political stability necessary for finalizing the FTA, contrasting with the instability post-Brexit.

The India–United Kingdom free trade agreement

  • It 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.

Timeline and developments in the UK-India Free Trade Agreement (FTA) negotiations:

May 2021: Prime Ministers from both the countries agree on an Enhanced Trade Partnership, aiming towards a free trade agreement by removing trade barriers.

January 2022: Official negotiations for the UK-India FTA commence.

December 2023: The UK and India reach the 13th round of negotiations, fast-tracking discussions to conclude before upcoming elections in both countries.

January 2024: The 14th round of negotiations begins. Issues include India's push for social security provisions for Indian workers in the UK, which the UK government is cautious about.

March 2024: UK negotiators make a final attempt in India to finalize the FTA before India's election campaign pauses negotiations. UK officials believe a Labour government might be more open to India's demands on visas and social security.

March 12, 2024: PM’s agrees to accelerate efforts for an early conclusion of the FTA during a phone call.

March 15, 2024: Negotiations are paused until after India's elections conclude in spring, reflecting India's focus on domestic politics.

April 2024: India places the completion of the FTA as a priority for the first 100 days after the new government takes charge. Issues like exemptions from the UK’s carbon tax and visa concessions remain unresolved.

May 28, 2024: A British delegation cancels its visit to New Delhi due to the UK's snap election announcement, impacting negotiation schedules.

Spring 2024: Most chapters of the FTA covering goods, services, investments, and intellectual property are completed. Remaining issues include rules of origin, concessions on electric vehicles and Scotch whisky, social security agreements, carbon border tax, and liberalisation of financial services.

June 4, 2024: Current Party’s reelection sets a positive tone for UK-based experts, affirming India's commitment to concluding the FTA negotiations within the first 100 days of the new term.

July 4, 2024: Post the UK general election, negotiations are set to resume for the FTA.

June 14, 2024: PM’s reaffirm their dedication to finalising the FTA during a bilateral meeting at the G7 summit.

Benefits of the FTA

  • Enhanced Trade and Economic Growth:
    • Increased bilateral trade volume and economic growth. According to data, Bilateral trade between India and the UK increased to $20.36 billion in 2022-23 from $17.5 billion in 2021-22, reflecting significant economic engagement.
    • The FTA aims to further boost trade by eliminating tariffs and reducing non-tariff barriers, facilitating easier access to each other's markets for goods and services.
  • Market Access and Diversification:
    • The FTA could provide Indian businesses with preferential access to the UK market, benefiting sectors like textiles, pharmaceuticals, and IT services.
    • Indian textile exports face tariffs as high as 10% in the UK; a trade deal could put India on par with competition such as Bangladesh, and revive textile exports. Even with high tariffs, Indian textile exports to the UK were valued at £359 million in 2020-21, highlighting the potential for growth under a preferential trade agreement.
  • Boost to Investment and Job Creation:
    • Attraction of foreign direct investment (FDI) from the UK. The FTA could provide a framework for greater investment flows between the two countries, particularly in sectors such as technology, renewable energy, and infrastructure.
    • For example, the UK was the fourth-largest investor in India in 2020-21, with cumulative FDI inflows amounting to $30.6 billion from April 2000 to March 2021.
  • Technology and Innovation Collaboration:
    • The FTA could facilitate partnerships in research and development, intellectual property rights protection, and technology transfer.
    • Enhanced collaboration can spur innovation and competitiveness in both economies, fostering growth in high-tech industries and boosting productivity.
  • Strategic and Geopolitical Alignment:
    • A comprehensive FTA could deepen strategic cooperation between India and the UK, aligning their interests in regional and global forums.
    • Closer ties can enhance diplomatic relations and cooperation on issues such as climate change, cybersecurity, and global trade governance, contributing to stability and mutual prosperity.
  • Fast Tracking India- EU FTA:
    • When signed, the India-UK FTA will serve as a template for an agreement with India’s second-largest trade partner, the European Union (EU). Long stalled India-EU FTA deal could be fastracked.


  • Most chapters of the FTA covering goods, services, investments, and intellectual property are completed. Remaining issues include rules of origin, concessions on electric vehicles and Scotch whisky, social security agreements, carbon border tax, and liberalisation of financial services. The upcoming government have been pro- India in past and they could fastrack the India-UK FTA.

For more details please refer:







Q) Consider the following statements:

  1. India is the UK's 7th largest trading partner, accounting for 1.9% of the UK's total trade by the end of 2022.
  2.  The trade balance between India and the UK has consistently been in deficit due to high imports of luxury goods.

Which of the above statements is/are correct?

A.1 only

B. 2 only

C. Both

D. None

Answer: D


Statement 1 is incorrect:

India is the UK's 12th largest trading partner and accounts for 1.9% of the UK's total trade, not the 7th largest. The UK is the seventh largest export destination for India.

Statement 2 is incorrect:

The trade balance maintained by India with the UK has largely been a surplus, not a deficit. Top three services exported from India to the UK are technical, trade-related and other business services, professional and management consulting services and travel.