India is seeking to strike more trade deals with other countries at a time of “global uncertainty”, its finance minister, Nirmala Sitharaman, said before talks with the UK chancellor, Rachel Reeves.
Sitharaman, who serves as finance and corporate affairs minister in Narendra Modi’s government, said she was hopeful the UK and India would finalise a free trade deal “sooner rather than later”.
Speaking at the Indian high commission during a visit to London, Sitharaman said global uncertainties were “multiplying by the day”, which was “driving many countries to clearly be active on [seeking] bilateral arrangements” that went beyond their old ideological and political ties.
“India is also looking at many bilateral arrangements. In the recent past, we’ve signed agreements with Australia, the UAE, with Oman, and we’re looking forward to concluding the bilateral trade agreement with the UK, negotiating also with the EU,” she said. “I think that’s the way the world is going.”
Asked whether Donald Trump’s tariffs had created more urgency in the UK-India trade talks, Sitharaman said the negotiations had been going on for “a very long time” and that it was “not as if we are rushing into a UK FTA because of what is going on in the US”.
But, she added: “We hope that [with] the new government showing a great deal of commitment and enthusiasm to have this agreement signed, we will be in a position to sign it sooner rather than later.”
Sitharaman said the world was increasingly multipolar with many competing powers, which had created “a rapidity with which countries are talking to each other and seeing if they can come up with something, an arrangement”.
India has historically been one of the world’s most protectionist countries, with a focus on self-sufficiency over opening up for international trade. When Modi came to power he promised to boost India’s already rapid growth by liberalising its economic and trade policy.
Nonetheless, Delhi has often taken a cautious approach towards trade deals. An agreement signed last spring with the European Free Trade Association, made up of Norway, Switzerland, Iceland and Liechtenstein, took 16 years to negotiate.
UK ministers are accelerating trade negotiations with the world’s fifth-largest economy, which have been happening since January 2022, in hopes of mitigating the impact of US tariffs. Reeves will meet Sitharaman for talks on Wednesday, withthe UK and India pursuing a bilateral investment treaty in parallel to a free trade agreement.
Reeves said ahead of the talks that “in a changing world, this government is accelerating trade deals with the rest of the world to back British business and provide the security working people deserve”.
She and Sitharaman are expected to hold a working dinner on Wednesday night, which may also be attended by Keir Starmer.
Sitharaman said in London that the discussions would touch on “successfully concluding the investment treaty”, mutual recognition of professional qualifications and collaboration on science and technology.
She said the two countries would also discuss higher education. “There was a time when the first choice for Indian higher education seekers was UK, but gradually it came down,” she said. “You see Indians discuss prioritising the United States rather than UK … That momentum will have to be regained.”
There have been reports of tensions between the Home Office and Department for Education over graduate visas which allow international students to stay in the UK for two years after completing their degrees, even if they are not working.
Ministers are drawing up policies to reduce legal migration into the UK and are targeting graduate visas amid government concerns they are being abused. However, the education department is said to be anxious about the impact this would have on the beleaguered university sector.
Jonathan Reynolds, the trade secretary, is also due to take part in talks with India on Wednesday. He travelled to India last month to formally relaunch trade negotiations under Labour.
As part of the negotiations, the UK has asked for lower tariffs on goods such as cars and whisky, and increased access for British lawyers and financial services companies to the Indian market. In return, India has asked for faster and easier processing arrangements for its companies to send workers to the UK.
One sticking point has been Delhi’s concern that Indians working temporarily in the UK on business visas have to pay national insurance, despite not being eligible for UK pensions or social security benefits.
