Due to recent political changes in the UK, the negotiations are now taking place again after a brief hiatus. On July 29, the final round of negotiations took place. The officials announced that the sixth round of negotiations would begin on December 12. The negotiations began on January 13, 2022, and one of the topics covered was trade-in products, particularly passenger vehicles.
In a free trade agreement, the maximum amount of items that can be traded between two countries is subject to a significant reduction in or elimination of customs charges. The UK side is asking for duty exemptions in the automobile industry.
The agreement is a top priority for both nations, according to Piyush Goyal, minister of commerce and industry, who stated this last month. He further stated that things were moving along smoothly and would produce positive outcomes.
The FTA negotiations between India and the UK were supposed to be finished by Diwali (October 24); however, due to political changes in the UK, the deadline was missed. The agreement is divided into 26 chapters, which include investments, commodities, services, and intellectual property rights.
Customs duties under the agreement would be reduced or eliminated, which would benefit India’s labor-intensive industries like textiles, leather, gems, and jewellery and increase exports to the UK market. The UK is requesting tariff exemptions for products including Scotch whiskey and automobiles.
Trade between the two nations rose from $13.2 billion in 2020–21 to $17.5 billion in 2021–22. In 2021–22, India’s exports were $10.5 billion, while its imports were $7 billion.
Another significant investor in India is the UK. In 2021–2022, New Delhi attracted $1.64 billion in foreign direct investment. The amount was around $32 billion from April 2000 to March 2022. The UK is one of the biggest markets in Europe for Indian IT services in the services sector.