India is waiting for the UK’s new Labour government to come to the table to resume negotiations for the proposed India-UK free trade agreement (FTA) as talks have been paused since the UK general elections in May 2024, sources said.

“We are giving them time to make up their mind about the way they want to take the FTA talks forward because every government has its own priority,” a senior official told businessline.

The Labour party, led by Prime Minister Keir Starmer, swept to office after a decade in July this year as the country grappled with inflation and slow growth. “The new government was so far busy with its first budget. Now that the budget session is over, New Delhi is hopeful that the FTA dialogue could resume shortly,” the official added.

Boost for bilateral trade

The India-UK FTA talks began under the Conservative government, led by former PM Boris Johnson, in January 2022. Initially, urgency was shown by both sides to conclude the talks early and Johnson set a deadline of Diwali 2022, which was missed. A second informal deadline to conclude the talks by the Diwali of 2023 was also missed as the two sides struggled to deal with a handful of tricky issues.

With the Labour government now at the helm, New Delhi is hopeful that it will be as enthusiastic about the free trade deal as the Conservatives as it seeks to benefit both sides. The FTA, once implemented, is estimated to double bilateral trade to $100 billion by 2030 opening up new markets for businesses in both countries.

“If you look at the UK, you will find that there are bipartisan positive sentiments for the FTA. In fact Prime Minister Starmer had also stated at that point of time (when he just got elected) that India was a top priority in terms of FTA,” the official said.

“The only issue is that they are taking time before they come for the round. This could be because a lot of briefings are needed to come to grips with the negotiating position,” the official added.

‘On the slow track’

But, some sources tracking the UK government said the new regime may be taking it slow as its focus right now is on accelerating economic activity, increasing revenue earnings and controlling inflation in the unstable global environment. “The UK government has to show definite gains flowing from potential FTAs to the people as there are apprehensions of job losses or decline in manufacturing activities due to FTAs giving greater market access to partner countries,” the source said.

The UK wants India to bring down import duties steeply in sectors such as Scotch and automobiles, give greater access in financial and legal services, and bring in stronger IPR rules, to provide additional protection to pharmaceutical majors.

India, on the other hand, has demanded easier work visa norms for its professionals apart from more market access for a number of goods.

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