A UK trade delegation has arrived in India to open negotiations on a new free trade agreement that could double UK exports to the country by 2030.
Anne-Marie Trevelyan, international trade secretary for the UK, launched the negotiations today at an event in New Delhi with Piyush Goyal, India’s minister of commerce and industry.
An agreement between the two countries could double the value of trade between them by 2035 – up from £23 billion in 2019 – and could increase wages in the UK by up to £3 billion, according to the Department for International Trade (DIT).
The DIT added that the talks demonstrate the UK’s strategic pivot towards the Indo-Pacific region, and will usher in a “5-star year” for UK trade, as it seeks to add to the 38 free trade deals it has already signed since leaving the European Union (EU).
This year, the UK plans to launch free trade negotiations with Canada, Mexico, and the Gulf states, and it also aims to secure accession to the £8.4 trillion trade bloc known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).
India – a major economy and a major opportunity for UK trade
By 2050, India is set to become the world’s third largest economy, with a population larger than the US and Europe combined.
As one of the world’s fastest-growing economies, the DIT said that a free trade deal would put UK businesses at the front of the queue to supply India’s growing middle class, which is forecast to hit a quarter of a billion people by 2050.
India is also a major source of foreign direct Investment for the UK, with Indian companies currently supporting 95,000 jobs throughout the UK.
In the West Midlands alone, for example, almost 30,000 people were employed via Indian investment in 2019, and the region could see a boost of up to £300m with opportunities for manufacturers of motor vehicles and parts.
Mike Hawes, CEO of the the Society of Motor Manufacturers and Traders (SMMT), said that India offers a promising market with increasing demand for personal mobility, and long-term plans to transition to electric vehicles.
“This presents major opportunities for UK automotive companies which, due to their global competitiveness, diversity, and expertise, have already proved attractive for Indian investment,” he said.
“Key to any future trading relationship will be the progressive removal of tariffs, enhanced trade facilitation, and reducing other barriers to trade, which can be highly complex and burdensome.”
The DIT said the UK wants an agreement that slashes barriers to doing business with India’s £2 trillion economy, including cutting tariffs on exports of British-made cars and Scotch whisky.
At present, British-made Scotch whisky and cars currently face duties of 150% and 125% respectively.
Removing duties alone would increase UK exports to India by up to £6.8 billion, supporting tens of thousands of jobs across the UK.
A free trade deal with India would also assist the UK’s green energy industry.
By 2020, the Indian government plans to install 175 GW of renewable energy capacity, with more to come in subsequent decades.
The UK’s renewables industry would benefit from a deal that slashes barriers to trade such as import tariffs, which are as high as 15% on wind turbine parts from the UK.
On the Indian side, Minister Goyal will seek concessions on visa and immigration quotas and market access for agricultural products, such as basmati rice.