India-UK: Jonathan Reynolds in Delhi as trade talks relaunched

India and the United Kingdom have restarted free trade negotiations after a hiatus of nearly a year due to impending elections in both countries. This resumption signals a renewed commitment to strengthening economic ties between the two nations.

UK Business and Trade Secretary Jonathan Reynolds met with Indian Trade Minister Piyush Goyal in New Delhi on Monday to kick off two days of discussions. Goyal posted on social media X that the talks would focus on "advancing" negotiations and ensuring a "balanced, ambitious and mutually beneficial" agreement. Both sides are eager to make substantial progress in these discussions.

The two countries have held over a dozen rounds of negotiations since 2022, but have consistently failed to reach an agreement. Key sticking points include India's high tariffs on Scotch whisky, and the easing of fees and visa regulations for Indian students and professionals traveling to the UK. Resolving these issues is crucial for a successful trade deal.

The talks are the first to be held since the UK's Labour Party came to power, with Reynolds stating that reaching an agreement is a "priority" for his government. "Growth will be our guiding principle in our trade negotiations with India, and I'm excited by the opportunities this dynamic market offers," he said in a statement ahead of the meeting. India is predicted to become the world's third-largest economy in a few years. This makes a trade deal even more strategically important for the UK.

Following the meeting, the two ministers held a joint press conference, but neither side gave a deadline for the conclusion of negotiations. Previous deadlines set by former ministers Boris Johnson and Liz Truss have passed without a final agreement. For Delhi, trade negotiations have taken on new significance after US President Donald Trump decided to impose reciprocal tariffs on imported goods from countries including India. These geopolitical factors add complexity to the discussions.

The UK is also a highly valued trade partner for Indian Prime Minister Narendra Modi's government, which has ambitious plans to increase exports by $1 trillion by fiscal year 2030. Last November, the UK announced that it would restart negotiations in the new year, shortly after Sir Keir Starmer met with Prime Minister Modi at the G20 summit in Brazil. This highlights the high-level political commitment to the trade deal.

According to a UK government statement, the current trade relationship between the two countries is worth £41 billion ($52 billion), and a trade deal could unlock new opportunities for both. London has already identified sectors that could benefit, including advanced manufacturing, clean energy, and professional and trade services. An agreement also has the potential to unlock a valuable market worth billions of dollars for British cars, Scotch whisky, and financial services. The economic benefits are substantial and wide-ranging.

India is seeking greater mobility for its professionals and students in the UK, while also pushing for faster visa processing times. It may also seek concessions for its business visa holders who work temporarily in the UK, who are required to pay National Insurance but remain ineligible for social welfare benefits. Addressing these concerns is essential for India to view the deal as equitable.

At the joint press conference, Goyal said that immigration was not part of the discussion. "India has never discussed immigration in any free trade negotiation," he said. Reynolds added that business mobility was a "separate issue" from immigration. This clarification aims to address potential misunderstandings about the scope of the negotiations.

During Reynolds' visit, he and Goyal will also visit the British Telecom office in Gurugram, a city north of India. UK Investment Minister Lord Dominic Johnson is also in India and will participate in events in Mumbai and Bangalore, two of India's major business hubs. These visits underscore the commitment to fostering investment and collaboration between the two countries.

After years of skepticism about free trade agreements, India has been signing or negotiating agreements with several countries or blocs. Last year, after nearly 16 years of negotiations, it signed a $100 billion free trade agreement with the European Free Trade Association (a group of European countries consisting of four non-EU members). It also plans to resume negotiations with the EU this year. This shift towards free trade reflects India's growing economic confidence and ambition.