The two countries currently share a trade relationship worth £41 billion ($52 billion).
India and the United Kingdom have officially resumed negotiations for a Free Trade Agreement (FTA), marking a renewed push to strengthen economic ties between the two nations. The discussions, which had been on hold for nearly a year due to general elections in both countries, gained fresh momentum following a meeting between Indian Prime Minister Narendra Modi and his British counterpart, Keir Starmer, on the sidelines of the G20 Summit in Rio de Janeiro, Brazil, in November 2024.

The high-level trade discussions were kickstarted in New Delhi on Monday (February 24, 2025), with India’s Commerce and Industry Minister, Piyush Goyal, and the UK’s Secretary of State for Business and Trade, Jonathan Reynolds, leading the two-day talks. Both ministers underscored their commitment to ensuring the trade deal is "balanced, ambitious, and mutually beneficial."

A Renewed Push for Economic Cooperation
The trade talks between India and the UK have been a long and complex process. Since the negotiations began in 2022, multiple rounds of discussions have taken place, but several contentious issues have stalled progress. The UK is keen on reducing high tariffs on its exports to India, especially on Scotch whisky and automobiles, while India is pushing for greater access for its skilled professionals and students to the UK, particularly regarding visa relaxations and faster processing times.

With the Labour Party now in power in the UK, Reynolds has emphasized that securing a trade deal with India is a "top priority" for the British government. "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 ahead of the meeting.

Key Issues in the Negotiations
Despite the shared economic interests, certain sticking points remain:
  1. Tariffs and Market Access: The UK has been pushing India to lower its high tariffs on British exports, particularly Scotch whisky, cars, and financial services. Indian consumers have shown increasing demand for British products, and a reduction in tariffs could significantly boost trade volumes.
  2. Mobility of Indian Professionals: India has been advocating for easier work visas and extended stays for its professionals in the UK. Indian negotiators want Britain to relax restrictions for Indian service providers, particularly in the IT and healthcare sectors, to help bridge the talent gap in the UK economy.
  3. Social Security Contributions: A major demand from India is the elimination of social security payments for Indian professionals working temporarily in the UK. Currently, they are required to contribute to the UK’s National Insurance but do not receive any social benefits in return.
  4. Investment and Technology Collaboration: The UK sees India as a high-priority partner in sectors such as clean energy, advanced manufacturing, and professional services. A trade deal could facilitate greater investments from British companies in India’s infrastructure and green energy initiatives.

For India, the trade talks have taken on renewed significance following shifting global trade dynamics. With the US imposing reciprocal tariffs on several countries, including India, New Delhi is looking to diversify its trade partnerships and reduce dependency on any single market. The UK, on the other hand, sees an FTA with India as a crucial step in its post-Brexit economic strategy.

India is projected to become the world’s third-largest economy within the next few years, making it an attractive partner for Britain’s trade ambitions. The two countries currently share a trade relationship worth £41 billion ($52 billion), and a finalized trade deal could unlock billions more in potential business opportunities.

No Fixed Deadline, But Strong Commitment
Despite the positive momentum, both sides have refrained from setting a firm deadline for concluding the talks. Past attempts to finalize an agreement under former UK leaders Boris Johnson and Liz Truss were unsuccessful, as previous deadlines lapsed without resolution.

At a joint press conference following Monday’s meeting, Goyal clarified that immigration policies are not part of the FTA discussions. "India has never ever discussed immigration in any free trade negotiations," he stated. Reynolds, meanwhile, acknowledged that business mobility is a "separate issue" from immigration and would require a different approach.

Investment Collaborations on the Way
As the trade discussions continue, Reynolds and Goyal will visit British telecom giant BT’s office in Gurugram, highlighting the importance of technology collaboration between the two nations. Additionally, UK Investment Minister Poppy Gustafsson is engaging with Indian business leaders in Mumbai and Bengaluru to explore investment opportunities.

The resumption of trade talks signals a renewed push for deeper economic ties between India and the UK. While challenges remain, both governments are keen on reaching an agreement that will not only boost trade but also foster stronger diplomatic and economic cooperation in the coming years.

India, which has recently signed a $100 billion FTA with the European Free Trade Association (an intergovernmental organisation comprising Iceland, Liechtenstein, Norway and Switzerland), is also expected to resume negotiations with the European Union during the year. This proactive approach to trade diplomacy underscores India’s ambition to expand its global economic footprint and secure beneficial trade agreements with key global partners.

As talks progress, all eyes will be on the Indian and British negotiators to see whether they can finally overcome the longstanding hurdles and deliver a landmark trade deal that benefits both economies.