India, UK Reaffirm Commitment to Free Trade Agreement and Strengthen Economic Ties
India and the United Kingdom have reaffirmed their commitment to expediting negotiations towards a Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT) that is mutually beneficial, as the two countries deepen economic cooperation in the face of a changing global trade environment.
This was announced at the 13th India-UK Economic and Financial Dialogue in London, co-hosted by India's Finance Minister Nirmala Sitharaman and UK Chancellor of the Exchequer Rachel Reeves. The two sides emphasized their mutual aspiration to forge stronger bilateral relationships across trade, investment, and innovation.
The UK gave a preview of its forthcoming Industrial Strategy, showing a particular interest in how it can complement India in high-priority areas of growth, including advanced manufacturing, life sciences, clean energy, professional and business services, financial services, creative industries, and defence. The partnership will leverage UK capability to support India's role as an emerging global manufacturing powerhouse.
One of the main highlights of the conversation was the reiteration of support for robust supply chains and industrial interlinkages, with both parties eagerly anticipating the signing of the India-UK Defence Industrial Roadmap, which seeks to enhance defence cooperation and enhance joint manufacturing efforts.
The two nations also marked the growing trade in financial services and committed to work closely to further develop the sector. The Financial Markets Dialogue (FMD) in December 2024 at GIFT City, India, set the stage for cooperation in banking, insurance, pensions, capital markets, and sustainable finance. The second round of FMD will be hosted in London later this year.
The UK received India's regulatory move to permit insurance companies in GIFT IFSC to invest abroad, as well as a proposed policy to grant similar permissions to pension firms. Further, the two countries agreed to increase capital-raising activities for Indian corporates through instruments such as rupee-denominated Masala Bonds.
Talks also addressed internationalising the Indian rupee, with India allowing foreign jurisdictions to open rupee accounts. Both nations said they would explore the role of London, as a hub of global finance, in facilitating this initiative and further integrating India into world financial markets.
“We agreed that the UK asset management sector can complement the UK-India Infrastructure Financing Bridge and support increasing opportunities for Indian investors to access global funds. Both sides agree to work together on a supportive policy framework and to use the next Financial Markets Dialogue to discuss this further”, according to the joint statement.
The UK and India recognised the importance of transition finance for mobilising capital to support sustainable development. Both sides welcomed each other’s work on this issue, including the UK government-commissioned Transition Finance Market Review.
“We have a shared ambition to ensure economic stability, increase investment, and reform our economies to drive growth and prosperity across both our countries. We celebrate our strong economic partnership, with bilateral trade valued at over 40 billion pounds and significant foreign direct investment stocks in both directions”, said the statement.
