India and the UK will resume negotiations on a free trade agreement FTA on Monday after a gap of eight months. The 15th round of negotiations, between the UK Secretary of State for Business and Trade Jonathan Reynolds and Commerce and Industry Minister Piyush Goyal, will occur under the shadow of Trump’s new tariffs that have led the world into uncertainty.
The FTA negotiations between the two nations were paused in May 2024, because of the general elections in both countries. However, because of the Trump tarrifs, an urgency for the negotiations can be felt. The subject of tariffs that the US is expected to impose on the countries with which it has a trade deficit can also be a point of discussion in the bilateral meeting between Goyal and Reynolds.
The Indian Side
India has brought down import duties on cars, motorcycles and select urban whiskey produced in the US. These lower duties on car insurance address some of the key demands of the UK. However, India might not be ready to sign the latest import duties or FDI limits in the FTA unless it gets anything in return from the UK, which is the 16th biggest trading partner for India.
If these changes become permanent, the companies in the UK will continue to enjoy concessions in the Indian industry ecosystem. However, India should see clarity on how the carbon tax, that the UK will collect from January 2027, will be neutralised after the FTA.
The negotiations on the India-UK FTA initially began in January 2022 and dealt with 26 chapters of policy areas. The majority of these chapters have been closed or are in the advanced stage. The 15th round of negotiation which is to be held between the two countries will try to bring conclusively to the three-year-long FTA process.
