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uk india

The UK and India have agreed to explore a “roadmap for a deeper trade partnership” which could progress to a future free trade agreement.

Liz Truss, the UK’s International Trade Secretary, said the talks will look into “resolving market access barriers” in a government announcement on Friday (24 July).

The UK can negotiate its own trade deals with countries around the world having formally left the EU on 31 January 2020.

Historic protectionism

Overall trade between the UK and India was worth £24bn last year, with India being the UK’s second largest investor.

However, India was only the UK’s 19th largest export market in 2019, according to trade stats site Trading Economics.

A report by the BBC ahead of Narendra Modi’s re-election as prime minister in 2019 highlighted the country’s tendency towards protectionism since gaining independence from British colonial rule in 1947.

It was only after the country needed IMF help following a currency crisis in the 1990s that India began to open up to foreign investment and reduce trade barriers for overseas businesses.

Highest tariffs

But even today, Indian tariffs are the highest of any major world economy, according to a report from the US Trade Representative’s office.

High tariffs and a multibillion-dollar subsidy programme for Indian farmers have attracted the wrath of the US, which accuses it of breaking WTO-rules around subsidy limits.

President Trump has also decried duties on popular US exports including motorcycles and whiskey.


However, despite this criticism, India operates a trade surplus in goods and services with the US.

It has become one of the world’s top outsourcing destinations and has a booming tech sector, according to the BBC.

And despite ranking 63rd in the World Bank’s ‘Ease of Doing Business’ in rankings, the country has recently combined dozens of levies into one national sales tax, making it much less bureaucratic to send goods over the Indian border.

UK opportunity

The UK has repeatedly stated that it will use its new-found trade independence to be an advocate for free trade, and reducing tariffs and trade barriers will be the main ambition of any talks.

In the meeting between Truss and her Indian counterpart Piyush Goyal last week, there was an agreement to work towards removing barriers – including on British exports of apples and pears – and an agreement to support legal professionals looking to work in each other’s countries.