India’s free trade agreement (FTA) talks with the UK and the EU are set to get a firm push with high-level visits lined up this week in New Delhi even as US President Donald Trump’s tariff threats have created uncertainty for the country’s economic ties with Washington DC.
“The visits from UK’s Secretary of State for Business and Trade, Jonathan Reynolds, and EU President Ursula von der Leyen are likely to speed up the ongoing FTA negotiations as the EU and the UK, too, have been at the receiving end of tariff threats from Trump. They want greater ties with other partners. India is a market which holds a lot of potential,” a source tracking the matter said.
FTA push
The UK Trade Secretary is expected to restart the India-UK FTA talks, which were launched under the Conservative government in January 2022, with a potential to double bilateral trade to an estimated $100 billion by 2030.
While the Labour Party took its time in examining the details of the negotiations, the wait seems to be over now.
“The UK is now very interested in pushing an FTA with India with PM Starmer himself hosting an Indian business delegation in December 2024. The Trade Secretary met the delegation separately to discuss opportunities under the proposed FTA,” the official said, adding that Trump’s tariff threats to all trading partners had added to the urgency.
While the UK steel industry will be directly hit if Trump imposes 25 per cent tariffs on imports next month, many more products are at risk because of the US threat of including VAT in the calculation of reciprocal tariffs.
“In India’s case, exporters of items such as textiles, food & beverages, agri products and leather, which are at risk from Trump’s tariffs, may all gain from an FTA with the UK. India offers a big market for not only UK’s automobiles and Scotch but also for other items such as meat products, chocolates, processed foods, cereals and even pharmaceuticals. So, an FTA can be a much-needed win-win,” the first source said.
Last month, while announcing her India visit, the EU President had noted, without directly naming US and President Trump, that the world had entered a new era of “harsh geostrategic competition”. Europe would keep seeking cooperation with its long-time friends and any country it shared interests with, she said.
“Europe and India are like-minded partners, bound by the shared conviction that democracy best serves the people. That’s why one of the first visits of the new Commission is to India,” Von der Leyen said on Friday.
Next Meeting
It is being hoped that following Commerce Minister Piyush Goyal’s meeting with the EU Trade Commissioner on February 28, the next round of the India-EU FTA negotiations in Brussels on March 10-14 will get a sufficient boost.
“The EU is India’s largest trading partner, accounting for €124 billion worth of trade in goods in 2023 or 12.2 per cent of total Indian trade, topping the US (10.8 per cent) and China (10.5 per cent),” per EU figures.
The US, however, is India’s largest trading partner country, with bilateral trade estimated at $129.2 billion in 2024 by the US government.