Today I am formally launching free trade negotiations between the UK and India from New Delhi, where I am meeting my Indian counterpart, the hon. Minister for Commerce and Industry, Piyush Goyal.
In line with our commitments to scrutiny and transparency, the Department for International Trade has published, and placed in the Libraries of the House, more information on these negotiations. This includes;
The UK’s strategic case for a UK-India free trade agreement (FTA)
Our objectives for the negotiations
A summary of the UK’s public consultation on trade with India
A scoping assessment, providing a preliminary economic assessment of the impact of the agreement
A UK-India FTA would be a substantial opportunity for both of our economies and a significant moment in the UK-India bilateral relationship.
Trade negotiations are a priority for both countries and build upon the enhanced trade partnership launched by Prime Minister Boris Johnson and Prime Minister Narendra Modi in May 2021.
The UK-India bilateral trading relationship is already significant, amounting to over £23 billion in 2019, and both sides have agreed to double bilateral trade by 2030. The UK and India will seek to agree a mutually beneficial agreement supporting jobs, businesses and communities in both countries.
By 2050, India will be the third largest economy in the world. The size and growth of the Indian economy mean a deal would unlock opportunities in every nation and region of the UK and across all parts of our economy. Tens of thousands of UK jobs are already supported by trade with India, and a trade deal has the potential to almost double UK exports to India, boost our total trade by as much as £28 billion a year by 2035, and boost wages across the UK by as much as £3 billion.
The opportunity is illustrated further by looking at some specific sectors. UK exports such as Scotch whisky and cars currently face large duties of 150% and 125% respectively. A deal that removed these significant barriers to trade would make UK firms such as car makers in England’s north-east and whisky distilleries more competitive.
Services account for almost half of current exports to India and our analysis shows UK companies—from insurance providers, to construction firms, to financial services—are set to gain from a deal as India’s economy continues to grow. This could include opportunities for companies that trade digitally, as the Indian Government aim to have a trillion-dollar online economy by 2025 and increase internet access to more than 600 million people.
In addition, India’s plan to rapidly expand offshore wind power generation is a major opportunity for the UK’s world-leading renewable industry that could see UK wind turbines making a major contribution to helping the world reach net zero. UK exporters would benefit from a reduction of tariffs such as a 15% tax on certain wind turbine parts.
A deal with India would be a big step forward in the UK’s strategy to refocus UK trade on the Indo-Pacific, where half the world’s people live and 50% of global economic growth is produced. A new economic partnership with India, alongside UK membership of the Asia-Pacific trading bloc, the comprehensive and progressive agreement for trans-Pacific partnership (CPTPP), would create a pillar in the region supporting free and fair trade.
During negotiations, and on the path to a comprehensive agreement, both Governments will consider the option of an interim agreement that generates early benefits for both countries. In parallel to trade negotiations, the UK-India Joint Economic and Trade Committee will continue to work in improving the UK-India trading relationship and addressing market access barriers outside of a trade agreement.
The first round of FTA negotiations will begin on 17 January. As negotiations progress, I will ensure that parliamentarians, UK citizens and businesses are provided with regular updates.