Finance Minister Nirmala Sitharaman is scheduled to visit London next week, from April 8-10, where she will engage in discussions related to bilateral trade and investment. Additionally, she will hold talks under the India-United Kingdom Economic and Financial Dialogue, a key mechanism aimed at strengthening economic cooperation between the two nations.
During her visit, Sitharaman is expected to meet with her UK counterpart, Chancellor of the Exchequer Rachel Reeves. The India-UK Economic and Financial Dialogue serves as a crucial institutional platform that facilitates discussions on enhancing trade and investment between India and the United Kingdom.
According to a senior official, discussions between Sitharaman and Reeves may also cover matters related to the trade agreement and the bilateral investment treaty. He further stated that economic and commercial cooperation between the two countries is guided by structured dialogues, which help in reviewing progress on trade and investment initiatives. These include the Economic and Financial Dialogue (EDF), which provides a regular forum for deliberations.
On February 24, Minister of Commerce & Industry Piyush Goyal announced that India and the UK had decided to resume negotiations for a Free Trade Agreement (FTA). This decision followed a meeting in Delhi between Goyal and his UK counterpart, Jonathan Reynolds.
“All options are on the table. We are engaged in active negotiations across three different aspects – the Free Trade Agreement, the Bilateral Investment Treaty, and a Double Contribution Convention Agreement. These three discussions are running in parallel and are interconnected,” Goyal stated.
However, he emphasized that India would not rush into a trade agreement hastily. “We will maintain speed but not act in haste,” he remarked when asked if a deadline had been set for finalizing the deal.
The proposed trade agreement comprises 26 chapters, covering a broad spectrum of areas including goods, services, investments, and intellectual property rights. The UK is particularly interested in securing lower tariffs on goods such as electric vehicles and Scotch whisky, while India is advocating for relaxed visa regulations for Indian professionals seeking opportunities in the UK’s services sector.
The India-UK Economic and Financial Dialogue (EFD) was established to bolster financial and economic cooperation between the two nations. It focuses on various aspects such as sustainable development, financial reforms, and regulatory frameworks, with an overarching goal of increasing bilateral trade and investment.
In December 2023, the third meeting of the India-UK Financial Markets Dialogue was hosted by the Finance Ministry in GIFT City, Gujarat. Participants from both nations discussed reforms in their respective financial services sectors, covering areas such as capital markets, insurance and reinsurance, pensions, FinTech, and sustainable finance.
Bilateral trade between India and the UK, encompassing both goods and services, reached 36.3 billion pounds during the fiscal year 2022-23 (April 2022 – March 2023). This marked a significant increase of 34.2 per cent, or 9.2 billion pounds, compared to the previous year (2021-22). Within this trade volume, India’s total imports from the UK stood at 14.7 billion pounds, while its total exports to the UK amounted to 21.6 billion pounds. India ranked as the UK’s 12th largest trading partner during this period, accounting for approximately 2.1 per cent of the UK’s total trade.
Furthermore, India emerged as the second-largest source of Foreign Direct Investment (FDI) in the UK, following the United States. According to the Department for Business and Trade (DBT) inward investment statistics for 2023-2024, India invested in 108 projects and created 7,533 new jobs in the UK.
Conversely, the UK remains a significant investor in India. It is the sixth-largest inward investor in India, following Mauritius, Singapore, the USA, the Netherlands, and Japan. The UK’s cumulative equity investment in India amounted to $35 billion between April 2000 and March 2024, representing approximately 5.17 per cent of all foreign direct investment into India.
With Sitharaman’s upcoming visit to London, it is anticipated that discussions under the Economic and Financial Dialogue will provide further momentum to India-UK economic relations. The meetings will serve to advance ongoing negotiations and explore new avenues for bilateral trade and investment growth.
