India, UK trade talks: What’s the plan amid Trump’s tariff threats?

India and the United Kingdom (UK) have resumed talks for a trade deal, nearly a year after they were stalled due to elections in both countries. Commerce and Industry Minister Piyush Goyal met UK Trade Secretary Jonathan Reynolds in Delhi on Monday (February 24) to discuss the proposed trade agreement.

India and the UK aim to more than double bilateral trade in ten years, Goyal said at a joint press conference with Reynolds. The trade talks come amid tariff threats from United States President Donald Trump on imported goods from many countries, including India.

Let’s take a closer look.

India-UK restart trade talks

India and the UK are back at the negotiating table after an eight-month pause owing to general elections in both countries last year.

Commerce Minister Goyal said the countries are focusing on a “path-breaking” free trade agreement (FTA) and an investment treaty. He added that the deal could increase merchandise trade between the two countries two to three times over the next ten years.

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Goyal wrote on X that the talks focused on “advancing” the FTA negotiations and ensuring that the agreement was “balanced, ambitious and mutually beneficial”.

During the meeting, our discussions focused on advancing the India-UK Free Trade Agreement negotiations and ensuring that the agreement is balanced, ambitious and mutually beneficial.

Reaffirmed the commitment to strengthening trade and investment ties while unlocking new… pic.twitter.com/2GLnn8LmEy

— Piyush Goyal (@PiyushGoyal) February 24, 2025

However, he did not set a deadline for finalising the proposed trade deal. Bilateral trade in goods and services between India and the UK touched $52 billion in the 12 months ending September 2024, Reuters reported citing British government estimates.

“The two countries are actively negotiating on three different fronts — free trade agreement, bilateral investment treaty, and a Double Contribution Convention Agreement. All three are running in parallel and are interlinked,” Goyal said after the talks.

UK minister Reynolds said it was his government’s “top priority” to secure a deal. “Growth will be the guiding principle in our trade negotiations with India and I’m excited about the opportunities on offer in this vibrant market,” he said in a statement ahead of the meeting.

Meanwhile, UK Investment Minister Poppy Gustafsson will address investors in Mumbai and Bengaluru hoping for Indian businesses to invest.

Why is there no India-UK trade deal even after years?

India and the UK have held 14 rounds of talks since January 2022. However, the two countries are yet to ink a deal.

Several roadblocks are keeping a trade agreement out of reach. The main sticking points include India’s high tariffs on British whisky and its demand for easing fees and visa rules for Indian students and professionals going to the UK.

As per a BBC report, India is seeking greater mobility for its working professionals and students to Britain, along with faster visa processing times.

The UK wants India to reduce customs duties on cars, whisky, and other goods. It is also demanding lower agricultural tariffs and opening India’s dairy market.

Talks on cars and whisky have caused disagreements, as the Indian alcohol industry seeks greater access to the UK market, reported Indian Express. Indian whisky manufacturers have called on the British government to relax its three-year maturation rule, which acts as an obstacle.

India is also looking for lower tariffs in the auto sector, especially in the EV segment, as per the newspaper.

Calling for easier visa norms, Goyal said it would play a key role in boosting bilateral trade and investments between the two countries. “We have as part of the FTA opened up each other’s services sector while protecting the sensitivities that each country has. This will open up new opportunities, and for all of this, business visas will be required and linked to investments and the services being opened up,” the commerce minister said. “If we both wish to expand our trade and investments, obviously we have to be faster and more liberal in our issuance of visas.”

However, he clarified that immigration would not feature in discussions on the trade pact. “India has never ever discussed immigration in any free trade negotiations,” Goyal said.

Reynolds added business mobility was a “separate issue” from immigration.

According to the Indian Express report, Indian businesses in the UK have long been seeking to slash extra costs linked to bringing skilled Indian professionals temporarily.

India is likely to bat for concessions for its citizens working temporarily in the UK on business visas, who have to pay for the mandatory National Insurance (NI) but cannot avail of social benefits.

As per Goyal, New Delhi and London will discuss a separate treaty on social security, reported Reuters.

India already has Social Security Agreements (SSAs) with Belgium, Germany, Switzerland, South Korea, France, Denmark, and the Netherlands.

Why FTA matters to India and the UK

A trade deal will be beneficial to both India and the UK, currently the world’s fifth and sixth-largest economies respectively. India is forecasted to be the third-largest economy in the world in the coming years.

As BBC noted, the UK is a “high-priority” trading partner for India, which has set a goal to expand exports by $1 trillion by 2030.

The potential trade agreement could act as a framework for India for trade deals with other Western trade partners such as the European Union, reported Indian Express.

New Delhi has ramped up efforts to pursue free trade deals with countries and has signed agreements with the UAE, Australia, and the European Free Trade Association (EFTA) comprising Switzerland, Norway, Iceland, and Liechtenstein.

For New Delhi, the trade talks become more important after Trump announced reciprocal tariffs on imported goods from India and other countries.

A trade deal with India will benefit the UK in several sectors, including advanced manufacturing, clean energy and professional and trade services, reported BBC. It could also open the Indian market for British cars, Scotch whisky and financial services.

With inputs from agencies