The talks, which aim to resolve outstanding issues, have been ongoing since January 2022 but stalled in May this year after a high-ranking British delegation canceled its visit to New Delhi ahead of the general election in the UK.
The talks will resume from where they were paused—the 14th round.
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However, with the change in leadership in the UK, it is not yet certain that the 14th round of talks, which began in January, will be the final round of discussions, as was agreed upon during the tenure of former British prime minister Rishi Sunak, the first of the two people mentioned above said.
Both countries are also negotiating a bilateral investment treaty as part of the broader FTA discussions. The agreement is expected to cover 26 chapters, including goods, services, investments and intellectual property rights.
Bilateral trade reached $21.34 billion in 2023-24, up from $20.36 billion in 2022-23. In it, merchandise trade has grown from $11.46 billion in FY23 to $12.98 billion in FY24 while services trade declined slightly from $8.90 billion in FY23 to $8.36 billion in FY24.
Queries emailed on Friday to the commerce ministry remained unanswered till press time.
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In an email response, a British High Commission spokesperson said, “During a meeting between Prime Minister Keir Starmer and India’s Prime Minister Narendra Modi at the G20 Summit in Brazil on 18 November, both leaders agreed to advance an ambitious UK-India comprehensive strategic partnership, aiming to elevate the relationship to new heights in trade and investment, security and defence, technology, climate, health, and education.”
The second person cited above said, “After the meeting, it was speculated that the dialogue would begin early next year. However, this does not necessarily mean it will start by the end of January. The talks are expected to be relaunched in the first quarter of the next fiscal year, which means they could begin between April and June.”
Earlier, Mint reported that the UK had agreed in principle to allow Indian professionals to live and work in the UK for a fixed—as yet undecided—period with work visas, with renewal options. Placing this provision under the FTA would protect Indians worker from any changes in the UK’s domestic policy.
In return, India may allow the import of a fixed number of premium electric vehicles annually on reduced duties. The number of cars being discussed was in the range of 2,000-2,500, but this cap could be adjusted.
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To be sure, immigration remains a sensitive domestic political issue in the UK.
Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), a think tank, said India should exercise caution in agreeing to commitments on non-trade issues like sustainability, environment, intellectual property, gender, labour and digital policies, as the regulatory frameworks in these areas differ significantly between the two countries.
“Additionally, India must seek clarity on whether the UK will apply its Carbon Border Adjustment Mechanism (CBAM) tax to Indian exports post-FTA. If CBAM remains, UK goods could enter India tariff-free, while many Indian goods would face additional costs, creating an uneven playing field.”
The UK’s main demands include substantial tariff reductions on Scotch whisky, which currently faces a steep 150% duty, as well as on electric vehicles and chocolates.
For Scotch whisky, India has proposed a deal similar to its agreement with Australia under the India-Australia FTA, where duties on Australian wines were cut from 150% to as low as 75% over a 10-year period.
Under the proposed terms, tariffs on bottled Scotch whisky could initially be reduced to 100%, with a further reduction to 75% over the next decade.
