India-UK FTA talks likely to resume next month, Labour to revisit mobility

"The fourteenth round of FTA negotiations, stalled due to the general elections in both countries, will kickstart again next month, now that elections are over and new governments have taken charge," said the first person mentioned above, speaking under anonymity.

"Both sides are hoping for a quick completion of the FTA. The UK parliament, currently on recess, is expected to resume soon. The FTA talks will gather pace once after the completion of the recess. However, the new UK government could also revisit the FTA discussions to revise agreed terms (terms agreed with the Rishi Sunak government)," the person added.

Also Read: India-UK free trade agreement on track despite Labour Party’s win

With most aspects of the India-UK FTA nearly resolved, only “a few minor adjustments" remain, and these are expected to be taken on by the Labour Party, this person said.

These include major issues related to migration, mobility, and a liberalised visa regime for Indian workers, which remain the sticky issues between both sides.

Migration, mobiliy and visas are political hot potatoes for any British government and any such international agreement will need to be ratified by the British parliament. Starmer's Labour party, which won a landslide victory, is set to review contentious subjects in all such agreements, and may even seek a revision in the terms agreed so far.

"While consensus has been reached on most issues, there are discussions expected on migration, mobility, and a liberalized visa regime for Indian workers when both sides meet," the second person mentioned above said, also requesting anonymity.

Also Read: India, UK reach FTA breakthrough on mobility of persons, electric vehicles

"The completion of the 14th round of discussions will likely set the stage for the signing of the FTA," the second person added.

Bilateral trade has grown from $17.5 billion in fiscal year 2022 to $20.36 billion in FY23 and to $21.34 billion in FY24. 

So far, both sides have completed 13 rounds of discussions to ink an FTA which will give both countries better access to each other's markets.

The 14th round, which kicked off in January 2024, was stalled because of general elections in both countries.

The 13th Round of negotiations took place from 18 September to 15 December last year and focused on issues such as goods, services, and investment.

"The UK side will also be revisiting talks initiated by the former administration led by Rishi Sunak while scrutinizing key aspects of the FTA, with a particular focus on mobility provisions that have previously been contentious," the first person mentioned above said.

"As the review process progresses, these concerns could shape the direction of the talks, potentially leading to revisions in the terms previously negotiated," the person said adding the resumption of discussions is crucial for both India and the UK, with the FTA seen as a pivotal move to bolster bilateral trade and economic ties.

"The ongoing review reflects the Starmer administration's intent to ensure any agreements align with its broader policy objectives," the first person mentioned above added.

Also Read: India, EFTA sign free trade deal

A spokesperson of India's commerce ministry didn't respond to emailed queries.

“We have announced our intention to restart trade talks with a number of international partners, including India," said a spokesperson of the UK's Department for Business and Trade.

“We are committed to negotiating an FTA and Bilateral Investment Treaty with India and are working to resume talks and strengthen our trading relationship," the spokesperson added.

On 29 July, the UK’s Business and Trade Secretary Jonathan Reynolds  announced the government’s intention to deliver trade talks with India.

In addition, UK’s Foreign Secretary David Lammy reinforced the UK’s commitment to a trade deal on his recent trip on 24 July, stating that it will be the floor not the ceiling of UK-India ambitions to unlock shared potential and deliver growth.

'Real challenge lies in India improving product quality'

In merchandise trade, while India’s $5 billion export market in textiles, apparel, and footwear could benefit from reduced UK tariffs, the real challenge lies in India improving product quality to truly unlock growth potential, said Ajay Srivastava, the founder of economic think tank Global Trade Research Initiative (GTRI).

"UK exports like automobiles, Scotch whisky, and dairy products face India’s high tariffs, including a hefty 100% on cars and 150% on Scotch whisky. Although the UK demands zero tariffs on these goods, India is more likely to adopt a phased reduction in tariffs, similar to its approach with Australian wines," he said.

"In the services sector, the UK seeks greater access to India’s insurance, telecom, legal, and fintech markets, while India prioritises easier visa rules for its professionals. The UK’s reluctance to grant a large number of work visas, viewing it as a sensitive immigration issue, only deepens the divide. Beyond these, differences persist in areas such as intellectual property rights, labor regulations, trade and gender issues, and sustainability standards," he added.