India-UK Free Trade Agreement And Investment Treaty Likely To Be On Agenda As FM Sitharaman Set To Visit London Next Week: Report

Finance Minister Nirmala Sitharaman is set to visit London from 8-10 April for high-level meetings, where key issues related to the proposed India-UK Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT) are expected to be discussed, PTI reported citing official sources.

Sitharaman will participate in the India-United Kingdom Economic and Financial Dialogue and hold bilateral talks with the UK’s Chancellor of the Exchequer, Rachel Reeves, alongside other British ministers.

"Issues pertaining to the trade agreement and bilateral investment treaty (BIT) may also come up for discussions between the two," an official was quoted as saying by PTI.

Though FTA talks are under the Union Commerce Ministry, issues like investment treaties and norms related to financial services fall under the Finance Ministry.

These issues that fall under the finance ministry are some contentious ones that are still pending in the talks between New Delhi and London.

A serious impediment in the BIT negotiations is the dispute resolution mechanism.

India wants that foreign investors should attempt domestic legal recourse prior to approaching international arbitration, which partner countries are resisting on grounds of the inordinately lengthy Indian judicial procedures.

Interestingly, in its UAE BIT, India lowered this time frame from five years to three, fueling speculation regarding whether India can negotiate flexibility with the UK.

India wants increased access for students and professionals in the UK labor market, as well as duty-free access for some goods. In turn, the UK is demanding deep cuts in tariffs on goods such as scotch whisky, electric cars, lamb meat, chocolates, and financial services in India.

The negotiations resumed after eight months, and 14 rounds of negotiations have been held since the January 2022 launch.

Commerce Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds had last announced the revival of talks on 24 February.

The India-UK bilateral trade increased to $21.34 billion in 2023-24, from $20.36 billion in 2022-23. Britain is India's sixth-largest investor, with $35.3 billion worth of FDI received since April 2000.

India's recent decision to raise the FDI cap in insurance from 74 per cent to 100 per cent could give a boost to the UK as well, with new investment opportunities possible and perhaps giving a boost to the negotiations under way.

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