UK’s Business and Trade Secretary Jonathan Reynolds reached India to re-start the Foreign Trade Agreement negotiations on Monday 24 February with Commerce Minister Piyush Goyal, after the talks were abandoned after the 14th round, when the previous UK government led by the Tory party and the Indian government reached a deadlock, allegedly over data protection policies followed by general elections in both the countries.
The relaunch of talks on a UK-India trade deal is meant to negotiate a huge economic prize helping to deliver on the growth agenda. India is forecast to have the highest growth rate in the G20 for the next five years and set to become the world’s third biggest economy by 2028. With an expected 95 million strong middle class by 2035, there are more and more opportunities every day for UK businesses to sell to consumers in India ready to buy British.
Speaking to us from Delhi, in an exclusive interview Secretary Reynolds referred to his former visit as part of UK’s Opposition and said, “I came (to India) at the time to say the UK Labour Party was committed to a trade deal with India. If the Conservative government, did it, we would have implemented it, and if they didn't do it, we would have picked it up and tried and get it done. That's what we're here doing. I know there's always huge interest in the timescale on these things, and you know when they'll be ready by and getting it right is the most important thing. We have got great hospitality here, brilliant conversations in terms of progressing things. So very, very pleased with it.”
The talks opened against a backdrop of Indian commerce and artisans on a joint visit to Delhi’s National Crafts Museum. The pair also were due to spend time visiting BT India’s office in Gurugram – one of the largest UK employers in India – to see first-hand how UK tech and Indian talent are helping solve global challenges.
The UK and India are currently the sixth and fifth largest global economies respectively, with a trade relationship worth £41 billion and investment supporting over 600,000 jobs across both countries.
This trade deal could unlock new opportunities for businesses and consumers in all regions and nations of the UK, support jobs, boost wages, and back the high-growth sectors identified in the government’s upcoming Industrial Strategy, such as advanced manufacturing, clean energy, financial services, and professional and business services.
Why should India choose the UK?
Amidst US President Donald Trump’s looming tariff war, when asked, what competitive advantages does the UK offer in securing a robust trade agreement especially as India is also in talks with EU and the US, the Business Secretary points towards the complimenting economies between UK and India as well as Britain’s ‘Living Bridge’. Explaining he said, “India is a country where a lot of people want to be a preferred partner, because of the excitement, the dynamism that exists here. The UK is in a really good position to do that, because first of all, we have been very complimentary economies. For example, I was talking with someone just now who said even in cheese, we've got paneer on one side and cheddar and stilted on the other. So, it's a very complimentary relationship.
“We obviously have this incredible living bridge of 1.8 million people in the UK who have an Indian heritage in their families- a really human family story to tell here. As well as those trading relationships when it comes to goods, when it comes to services, when it comes to investment age for those countries, we start from that really strong position already. But what is important is that we want to take it to a higher level, and the fact to be for themselves as to what that could mean if we get it right. I'd also say I could have a very strong relationship here with Minister Goyal, who's a real skilled Trade Minister who is respected. He's got a lot of deals across the line, so I think we're in a really good place to progress this.”
As part of the visit, Investment Minister Poppy Gustafsson is meant to address investors in two of India’s foremost business centres - Mumbai and Bengaluru, to sell the UK as the best and most connected place for Indian businesses to invest.
India has been the second biggest source of FDI into the UK for five consecutive years in terms of number of projects. In terms of value, the most recent stats show a 28% year-on-year increase in investment stock at the end of 2023.
She is meant to tell businesses in India that the UK offer for Indian investors has never been stronger, thanks to the government’s drive to restore economic stability and boost investor confidence as part of the Plan for Change.
Roadblocks and strategic partners beyond trade
When asked about possible or anticipated roadblocks in this negotiation, Mr Reynolds said, “We have progressed with the whole range of areas. I won't be too specific until we get the whole thing across the line. But of course, any deal involves asks from each side and concerns sensitivities on other sides. But really, what it comes down to is, is there the political will on both sides to get a deal done? Are we willing to come and give and take a little bit on both sides to reach that position? And I feel that does exist. And I feel we can get to a position where we can generally say to people in both countries, this is going to make you better off and going to make a difference to the lives. So, yes, when two economies are as big and significant as we both are, there are things you've got to take some time to get right, but I'm optimistic from my visit here in India, and I'm really looking forward to progressing things even further right.”
Explaining how UK will make itself an investor friendly country given the tax changes and which has resulted into many rich families leaving the country, the Business Secretary confirmed that the UK is committed to an environment that makes it attractive for foreign investment and businesses. He said, “I think the provisions that the Treasury and the Chancellor have put forward are that you can be in the UK for up to four years without your non-UK income falling into UK taxation and be in the UK for up to 10 years before inheritance tax comes into play. So, we are committed to the environment that makes the UK attractive for people, who are temporarily coming to the UK, to do business. Whether that's business mobility, all these changes to the non-domicile regime - we have always said that if you make the UK your long-term home, then you should be part of the same tax regime. But I think it's important that people also understand that this is consistent with wanting people to come and be temporarily in the UK, to do business here. And I think we should get across that we've got a compelling offer to people who want to come to the UK to do that.”
Concluding with a salute to India's growing role in the global economy, and how UK sees India as a strategic partner beyond just business and trade, the Business Secretary added, “I would say the FTA negotiations and bilateral investment treaty negotiations that I lead for the government are very, very important. But this is all part of a desire on the UK side, to move the UK India relationship to a whole new level, make it even closer, build on what we have be a preferred partner for India. And your trade and the economic relationship is obviously a substantial aspect of that. But we, we want to be, in this new phase, this new era of UK India, relationships. That's what the Prime Minister has said. And so, it's important piece of work I'm doing here on this trip, but it's all part of that wider picture.”
Exciting chapter ahead
Chair of UK India Business Council Richard Heald said, “The UK Government's visit reaffirms its commitment for a new ambitious and future-focused trade & investment relationship with India.
“We are delighted to note the progress on the UK-India Free Trade Agreement negotiations. Success in the FTA will support further economic growth for the world’s 5th and 6th largest economies. It will catalyse collaboration beyond into other areas too. Importantly, it will signal the UK and India are strategic partners. This is truly an exciting chapter of the UK-India partnership.”
Standard Chartered UK CEO and Head, Client Coverage UK, Saif Malik said, “We warmly welcome efforts to strengthen trade ties with one of the world’s most dynamic and fastest growing markets. As a leading global bank operating in India for over 160 years, the opportunities for British businesses are significant.
“Whether it’s improved access to India’s growing consumer market, opportunities in manufacturing, infrastructure and innovation, or collaboration in financial and professional services, the relaunch of trade talks can unlock even greater trade, investment and prosperity across the UK-India corridor.”
