India-UK FTA: Goyal, Badenoch discuss thorny issues in negotiations

Commerce and industry minister Piyush Goyal’s meeting with his counterpart Kemi Badenoch on Wednesday saw the "closure of several chapters" in free trade agreement (FTA) negotiations between India and the United Kingdom.

The meeting between Goyal and Badenoch aimed at resolving thorny issues, where negotiators were encountering major hurdles.

“The ministers identified and focused on low-hanging fruits, which included the closure of several chapters in the negotiations. This pragmatic approach aimed at resolving issues where negotiators had encountered challenges. The visit proved to be critical in overcoming crucial obstacles and charting a path forward towards an ambitious and mutually beneficial trade deal,” according to a statement released by the commerce department.

Goyal embarked on a two-day visit to London on Monday, and saw meetings with top government and industry officials in the UK, to pave the way for a comprehensive and mutually beneficial agreement.

India and the UK began negotiations on the FTA in January 2022, and set a Diwali deadline last year for the trade pact.

The deadline was missed as both sides were not able to iron out differences in providing greater market access for certain goods and services.

Goyal’s London visit on Monday saw meetings with top government and industry officials in the UK, with an aim to propel the discussions and pave the way for a comprehensive and mutually beneficial agreement.

The development also comes against the backdrop of the ongoing 11th round of FTA negotiations between both nations. 

The negotiations that kick-started in January last year have now reached a ‘critical stage’, according to the statement.

“Recognizing India's vast population of 1.4 billion and its remarkable economic growth, both ministers acknowledged the immense potential of the Indian market for the United Kingdom. Encouragingly, considerable progress was achieved during their frank and open discussions on various difficult issues,” it said.

During Goyal’s interaction with businesses and industry, he urged businesses in India and the UK to take advantage of various initiatives of the government of India. He also interacted with the members of the UK chapter of Institute of Chartered Accountants of India.

Till now, out of 26 policy areas or chapters, 14 chapters were substantially closed for negotiations, while significant progress was made in other chapters, according to the information shared by the commerce department in June.

Government officials had earlier said that regular meetings are being held at higher levels to review the progress, resolve the outstanding issues and discuss the way forward in negotiations.

Some of the sticky issues include key demands from the UK on lowering tariffs on whiskey and automobiles, as well as opening up India's legal, architecture, and financial services sector.  From India’s side, demand in the services sector with movement of skilled professionals is another unresolved issue.

Both countries aim to conclude the negotiations at the earliest. The UK is India’s 15th largest trade partner, with total trade at $20.36 billion in FY23.