UK-INDIA talks regarding a free trade agreement (FTA) between both countries “exceeded expectations” and securing a trade deal is a “top priority” for the British government, business and trade secretary Jonathan Reynolds told Eastern Eye on Tuesday (25).
Reynolds led a delegation to India earlier this week and met the country’s commerce and industry minister, Piyush Goyal, in New Delhi to discuss the deal.
In an interview from India’s capital on Tuesday, Reynolds hinted at making “compromises” on both sides to secure an FTA which is “genuinely beneficial” for India and Britain.
“We start from that really strong position already, but what is important is we want to take it to a higher level,” Reynolds said.
“I have a very strong relationship here with minister Goyal, a skilled trade minister who has seen respective deals across the line. So, we’re in a really good place to progress this,” he added.
“What it comes down to is this – is there the political will on both sides to get a deal done? Are we willing to give and take a little bit on both sides to reach that position? I feel that willingness does exist, and I believe we could get to a position where we can genuinely say to people in both countries that this is going to make you better off and going to make a difference to lives.
“So, yes, when two economies are as big and significant as we both are, there are things you’ve got to take some time to get right. But I’m optimistic from my position here in India, and I’m really looking forward to progressing things further.”
He added that while the economic relationship was key to bilateral ties, “we want to be in this new phase, this new era of UK-India relationships”.
“That’s what the prime minister has said. So, the work I’m doing here on this trip is an important piece, but it’s just one part of the broader picture,” he said.
Reynolds also stressed that the FTA negotiations and bilateral investment treaty talks were “very, very important” for the British government.
“This is all part of a desire on the UK side to move the UK-India relationship to a whole new level – to make it even closer, build upon what we have, and be a preferred partner for India.”
Britain and India on Monday (24) resumed negotiations for the FTA, which is expected to double or treble bilateral trade from the current $21.34 billion (£16.8bn) in the next 10 years.
Reynolds met Goyal for talks and held receptions for business leaders and investors while in India.
The business and trade secretary, who previously visited the country when Labour was in opposition, said, “India is a country where many people want to be a preferred partner because of the excitement and dynamism that exists here.
“The UK is in a really good position to do that because, first of all, we have very complementary economies. As someone was just saying, even in cheese – we’ve got paneer on one side and Cheddar and Stilton on the other. So, you know, it’s a very complementary relationship.
“We obviously have this incredible living bridge – 1.8 million people in the UK who have Indian heritage in their families. There’s a really human family story to tell here, as well as those trading relationships, when it comes to services and investment in each country.”
He added, “Only a pragmatic government can deliver the economic growth and stability that the British public and businesses deserve, delivering on the ‘Plan for Change’.
“Growth will be the guiding principle in our trade negotiations with India, and I’m excited about the opportunities on offer in this vibrant market.”
The negotiations resumed after a hiatus of more than eight months and are taking place after the UK general elections in July, when Labour won.
It was under the previous Tory-led government that the FTA talks were originally launched on January 13, 2022.
Currently, both India and the UK are engaged in negotiations across three distinct areas – an FTA, a Bilateral Investment Treaty (BIT), and a Double Taxation Avoidance Agreement.
Jonathan Reynolds with Piyush Goyal during a visit to Delhi’s National Crafts Museum on Monday (24)
Goyal said the agreement will be “pathbreaking” and would provide huge opportunities to grow “our current $20bn [£15.8bn] bilateral trade in merchandise to probably two or three times in the next 10 years”.
There was enthusiasm on both sides about the FTA, the minister said, adding, “going forward, our trade relations will further strengthen”.
India is looking for greater access for its students and professionals in the UK market as part of FTA negotiations, in addition to market access for several goods at nil customs duty.
On the other hand, the UK is seeking a significant cut in import duties on goods such as Scotch whiskey, electric vehicles, lamb, chocolates and certain confectionary items.
Britain is also looking for more opportunities for UK services in Indian markets in sectors such as telecommunications, and legal and financial services, including banking and insurance.
While in Delhi, Reynolds and Goyal visited Delhi’s National Crafts Museum. Both ministers also spent time at BT India’s office in Gurugram – one of the largest UK employers in India – to see firsthand how UK tech and Indian talent are helping solve global challenges.
Meanwhile, investment minister Poppy Gustafsson addressed investors in Mumbai and Bengaluru to attract Indian businesses to invest in the UK.
Reynolds told Eastern Eye, “The Conservative government had pledged to implement the trade deal, yet they didn’t follow through. We would pick it up and try to get it done. That’s precisely what we’re here doing.
“I know there’s always huge interest in the timescale on these matters, and getting it right is the most important thing. But we have received great hospitality here and had really brilliant conversations in terms of progressing things.”
Under former prime minister Boris Johnson, it was anticipated that the FTA would be concluded by Diwali, the Hindu and Sikh festival of lights, but that 2022 deadline was not met. Subsequent UK leaders have stressed the quality of the deal, rather than the festival timeline.
Responding to a question about the challenges in securing a comprehensive deal, Reynolds said, “I won’t be too specific until we get the whole thing across the line. But, of course, any deal involves questions from each side and concerns about sensitivities on the other side.
After taking charge at the Treasury last year, chancellor Rachel Reeves announced in the 2024 spring budget that the non-dom status was being abolished and will be replaced with a new residence-based scheme from April 6, 2026.
British media reports have since claimed that many millionaires have left the UK following this decision.
Reynolds explained that changes to the non-dom regime were about “having a modern system of how we tax people who are not permanently resident in the UK”.
He said, “Every country has a system like this, and we will put that alternative system in place.
“I think the provisions that the Treasury and the chancellor have put forward are that you can be in the UK for up to four years without your overseas income falling into UK taxation, and be in the UK for up to 10 years before inheritance tax comes into play.
“So, we are committed to the environment that makes the UK attractive for people who are temporarily coming to do business, whether that’s business mobility or these changes to the non-dom regime. And we have always said that if you make the UK your long-term home, then you should be subject to the same tax regime as others.
“It’s important people understand that it is absolutely consistent with wanting people to come and be temporarily in the UK to do business here. And I think we should get across that we’ve got a compelling offer to people who want to come to the UK to do that.”
Jonathan Reynolds and Piyush Goyal
India is projected to be the fastestgrowing economy among the G20 nations for the next five years, with forecasts placing it as the world’s third-largest economy by 2028. By 2035, the country is expected to have a thriving middle class of 95 million people.
According to official data, India has been the second-largest source of foreign direct investment (FDI) into the UK in terms of the number of projects for the past five years.
In value terms, the latest figures indicate a 28 per cent year-on-year rise in investment stock by the end of 2023.
Currently, India and the UK rank as the fifth and sixth-largest economies globally, respectively.
Bilateral trade between the two countries grew to $21.34bn (£16.8bn) in 2023- 24, up from $20.36bn (£16bn) in the previous financial year.
The UK remains a key investor in India, ranking as the sixth largest, with total FDI inflows amounting to $35.3bn (£27.8bn) between April 2000 and September 2024.
The negotiations for the FTA come at a time when US president Donald Trump has announced imposing reciprocal tariffs on imported goods from all of America’s trade partners, including India.
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