The two countries are also negotiating a bilateral investment treaty (BIT).
There are 26 chapters in the agreement, which include goods, services, investments and intellectual property rights.
The bilateral trade between India and the UK increased to USD 21.34 billion in 2023-24 from 20.36 billion in 2022-23.
The Labour Party’s election manifesto for the recent polls also committed to clinching the deal.
The new Starmer-led government’s new Foreign Secretary David Lammy is also on the record saying that he wants to finish the job on the FTA and plans to visit India within the first month of being elected.
According to the think tank GTRI (Global Trade Research Initiative), the agreement is nearly finalised and with a few minor adjustments like curtailing the number of visas for Indian professionals, the Labour Party is likely to give its approval.
It has suggested that India should focus on two issues – Carbon Border Adjustment Measure (CBAM) and non-traditional subjects like labour, environment, gender, and intellectual property rights – in the pact.
Historically, India has resisted incorporating these topics into FTAs as they often require domestic policy changes.
The GTRI report has stated that even if the UK agrees to eliminate tariffs on sectors like textiles, Indian exports might still need to meet stringent UK sustainability requirements, and this could adversely affect Indian exports, especially in labour-intensive sectors.
