India and UK intensify push for trade agreement amid US tariff threats; Goyal in UK to resolve sticking points

New Delhi: Union minister for commerce and industry, Piyush Goyal, arrived in London on Monday for two days of high-level talks aimed at accelerating the progress of the India-UK free trade agreement (FTA).

The discussions highlight both countries' determination to strengthen their economic relationship, particularly amid the challenges posed by the current global trade environment, which has been reeling under tariff hikes announced by US President Donald Trump.

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In his first engagement, Goyal met with the UK Secretary of State for Business and Trade, Jonathan Reynolds, to push forward the negotiations and reaffirm the shared commitment to enhancing bilateral economic ties.

"The ongoing discussions are a step towards ensuring that both India and the UK can navigate the challenges posed by the current global trade climate. The Free Trade Agreement talks are vital for expanding our trade relations and creating new opportunities for businesses in both countries," said Goyal following the meeting in a social media post on X.

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The timing of Goyal’s visit is significant, coming shortly after Finance Minister Nirmala Sitharaman’s trip to the UK, where she emphasized India’s increasing economic influence and the need for closer trade relations.

Sitharaman’s visit laid the groundwork for further engagement, and Goyal’s discussions are seen as a continuation of efforts to strengthen ties, particularly in the wake of the US tariffs that are affecting both India and the UK.

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The proposed FTA between India and the UK aims to reduce trade barriers, facilitate smoother flows of goods and services, and create a more robust trade relationship between the two nations. Both sides are optimistic that the agreement will be mutually beneficial, offering long-term economic stability and growth.

India's trade balance with the UK remains in surplus, with exports rising from $12.98 billion in FY24 to $13.17 billion in FY25 (April-Feb). Meanwhile, imports from the UK decreased from $8.41 billion in FY24 to $7.89 billion during the same period in FY25, as per the commerce ministry data.

Key items exported to the UK include machinery, chemicals, textiles, gems and jewellery, and organic chemicals. This growth reflects the strengthening of economic ties between the two nations and is expected to further benefit from ongoing trade negotiations.

The launch of the FTA talks was announced in March during the visit of Reynolds. However, since then, there has been no official announcement regarding the start of the formal talks or the specific round in which discussions will resume. The 14th and final round of talks began in January 2024 but was put on hold in May after the UK elections were announced.

Key sticking points in the ongoing India-UK free trade agreement (FTA) talks include India's demand for greater visa access and mobility for its skilled professionals, along with duty-free access for certain Indian goods. In return, the UK seeks market access for its dairy products and significant tariff reductions on products such as Scotch whisky, which currently faces a high 150% duty in India. The UK is also pushing for lower tariffs on electric vehicles and chocolates.