Editorial Analysis for UPSC - India – UK FTA

India – UK FTA


  • Prime Minister Narendra Modi and Boris Johnson announced their shared vision last year for a transformative decade for the India – UK partnership.
  • The two leaders declared their ambition to more than double the bilateral trade by 2030.



  • India and the United Kingdom have launched formal Free Trade Agreement (FTA) negotiations with the aim of concluding an early harvest trade agreement over the next few months.
  • Both countries, according to Commerce Minister Piyush Goyal, have agreed to avoid “sensitive issues” in the negotiations
  • India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade. 


Present Economic Relations:


  • Before looking at the future, it is worth taking stock of the present. There are nearly 600 U.K. companies in India employing more than 3,20,000 people.
  • This includes: Barclays which has its biggest office outside of London in Pune, whilst JCB’s products manufactured in India are exported to over 110 countries across the globe, as are those by consumer goods giant Hindustan Unilever headquartered in Mumbai; just two of many examples of British companies supporting Prime Minister Modi’s vision for an Atmanirbhar Bharat.
  • Similarly, India is already a big investor into the U.K. — especially in dynamic sectors such as fintech, electric vehicles and batteries. In 2020-21, India was the U.K.’s second largest source of investment in terms of number of projects.
  • Just last week, both Essar Group and Ola Electric announced investments into the U.K. But given the size of our two economies — the fifth and sixth in the world — our trade relationship in particular has underperformed. An FTA will change that.




  • A U.K.-India trade agreement will stimulate growth and employment in both countries. U.K. government analysis shows that, depending on the depth of the deal, an FTA would add around £14.8 billion to the GDP of India and the U.K. collectively by 2035.
  • A trade deal helps diversify supply chains by making it easier and cheaper for more businesses to do business across borders. Lower barriers coupled with greater regulatory certainty would incentivise new small and medium-sized enterprises to export their goods and services.
  • An agreement also means Indian and British consumers see improvements in the variety and affordability of products.



Way Forward:


  • Finally, an FTA would mark a new way of working between the U.K. and India. It gives a new framework within which the two countries can grow and flourish together, putting the colonial economic relationship where it belongs — in the history books.
  • We should acknowledge that past, especially in this 75th year of India’s Independence, and build a future which is about opportunities for both countries.


Source: THE HINDU.