UK-India trade talks to move to a third round but Ukraine war injects new tensions

Fri 25 Mar 2022
Posted by: Noelle McElhatton
Trade News

India and the UK have concluded the second round of talks for a proposed free trade agreement and have lined up the third.

Technical experts from both sides came together for discussions in 64 separate sessions covering 26 policy areas. The talks were in London with some virtual elements.

A Department for International Trade statement said that draft treaty text was shared and discussed across most chapters that will make up the agreement.

£28bn boost

As previously covered in the IOE&IT’s Daily Update, Britain hopes to seal a deal with one of the world’s fastest growing economies in the hope that it will boost their existing trade relationship by £28bn by 2035.

Trade minister Anne-Marie Trevelyan officially announced the launch of talks in January and there are hopes that an interim agreement could slash tariffs on British exports such as whisky and cars.

However, achieving a deal with India is not a given as the country has proved resistant to such overtures in the past and is highly protectionist.

Protectionist India

India increased tariffs on more than 50 imported items for the third year in a row in its 2021-22 budget, reported Nikkei Asia. The list includes a variety of automobile and electronic parts.

The Office of the US Trade Representative has said India has an average applied tariff rate that is “the highest of any major world economy”.

Prolonged trade talks between the EU and India had been stalled since 2013 and only resumed last year, reports Reuters.

EU negotiators are due to meet with India’s this month, reports Mint, with key demands include duty concessions for automobiles, and wines and spirits.

Call to suspend talks

According to Politico, there are now calls for the UK to pull its talks with India due to its links with Russia and failure to speak out on the Ukraine crisis.

Chris Bryant, chair of the all-party parliamentary group on Russia, said it was “preposterous” the negotiations were going ahead. 

“I would have thought this is a key moment when we should be trying to say to India, ‘look, you can’t abstain on this. You can’t abstain on a war crime. You can’t abstain on an illegal invasion of another country. Where’s your moral compass?’” he said.

UK prime minister Boris Johnson spoke with Indian PM Modri this week about the situation in Ukraine, but the Guardian reports a trip to India by a delegation of British MPs has been called off in a sign of a growing rift over India’s refusal to distance itself from the Russian invasion of Ukraine.