Britain and India will begin formal free trade agreement talks later this year, the UK government said on Tuesday after they agreed on an initial package to boost trade and bilateral investment.
With its massive population and growing economy, India has been high on London’s list of trade deal targets since Britain left the European Union last year.
Under a post-Brexit Global Britain strategy, the government of Prime Minister Boris Johnson is focusing its foreign policy priorities on the Asia-Pacific region by signing trade agreements with countries including Japan and Singapore.
UK Secretary of International Trade Liz Truss said India and Britain will begin negotiations on an agreement “in the autumn”, following the announcement of a preliminary “Increased Trade Partnership” agreement.
“We want to complete these negotiations as soon as possible,” she told Sky News during a round of broadcast interviews advertising the $ 1 billion ($ 1.4 billion, € 1.2 billion) partnership package.
“Of course, MTL (Free Trade Agreements) last longer, this is the immediate profit we can get for both countries, running jobs here in Britain and India,” Truss added.
She said both countries were seeking “early victories” by reducing barriers to trade from an FTA, stressing that Britain wants tariffs to be reduced or removed for various exports to India, from cars to whiskey.
The comments come ahead of virtual talks between Boris Johnson and Prime Minister Narendra Modi later Tuesday.
It follows that Johnson postpones a second official visit to India last month, due to the deteriorating coronavirus situation.
The announcement of the partnership with India includes lower trade barriers for some UK exports such as trees and medical equipment.
It also includes investment in Britain by vaccine manufacturer Serum Institute of India, which may eventually see more of its inoculations made in the UK.
Johnson’s office said it expects the deal, which precedes the FTA talks to create over 6,500 jobs.
But there are signs that India may be reluctant to sign a broader trade pact as Prime Minister Modi pushes the “Made in India” and “Confident India” agendas.
Last year, Prime Minister Modi abruptly intervened in the Comprehensive Regional Economic Partnership (RCEP), a free trade agreement between 15 countries in Asia and the Pacific, because New Delhi feared its agriculture, dairy and services sectors would be in disadvantage.
Former US President Donald Trump devalued India as the “tariff king” for its duties on imported goods, hampering trade talks despite his friendly relations with Prime Minister Modi.
Talks are expected to resume between India and the EU on a free trade agreement later this month, eight years after 16 rounds of talks were stalled.
Trade negotiations are also said to be resumed with Canada soon after a four-year gap.