The UK and India have agreed 90% of their free trade agreement, businesses were told on a call with negotiators this week.
There are hopes the UK government will succeed in finalising a highly coveted trade deal with India, a booming economy of 1.4 billion people, this year.
A government source told the Guardian that mobility, which involves visas for Indian workers and has been one of the most contentious issues in the negotiations, had largely been resolved.
“We are nearly there. We are as close as we’ve ever been, but conversations at the political level cut both ways,” the source said.
At a briefing with UK negotiators from the trade department on Tuesday, businesses were told that 90% of the deal had been agreed and that some of the outstanding issues related to whisky, cars and pharmaceuticals.
The eventual deal could mean dramatic tariff reductions on scotch whisky and car exports to India, helping two sectors of the UK economy that are heavily exposed to the impact of Donald Trump’s tariffs in the US.
The call with businesses took place before talks between Rachel Reeves and India’s finance minister, Nirmala Sitharaman, about a bilateral investment treaty, which the UK and India are negotiating in parallel with the free trade agreement.
The treaty, which would establish legal protections for investments between the UK and India, is a top priority for ministers because of the benefits for the British financial services sector.
Sitharaman attended a working dinner with Reeves and Keir Starmer on Tuesday night. On Wednesday, she held talks with Jonathan Reynolds, the trade secretary, who travelled to New Delhi in February to formally relaunch the talks.
At an event at the Indian high commission before her meetings on Tuesday, Sitharaman said India was seeking more bilateral trade agreements as a result of global uncertainties “multiplying by the day”.
Speaking to reporters after the talks on Wednesday, she said there was a “great sense of positivity and dedication” to conclude the UK-India deal soon. Ministers announced a package of £128m in new export deals and investments with India after her visit.
Reeves said ministers were pursuing trade deals with countries including India because it was “imperative we go further and faster to kickstart economic growth”.
Keshav Murugesh, the chief executive of the technology company WNS, which is expanding its London headquarters, said closer ties would “fuel innovation and generate high-skilled jobs” in both countries.
Some of the issues that remained outstanding in the trade deal negotiations earlier this year included some agricultural exports and India’s demand to be excluded from the UK’s forthcoming border tax.
The Guardian revealed last year that India had asked for an exemption from the UK’s carbon border adjustment mechanism (CBAM) – a planned tax on the import of carbon-intensive goods such as steel and fertiliser – on the basis that it is a developing country.
Any such exemption would be controversial because the tax is designed to support UK steel producers by levelling the playing field with countries that have a lower or no carbon levy.
The UK launched negotiations for a free trade agreement with India, which is seen as one of the biggest prizes of Brexit, in January 2022. Successive Conservative governments sought to strike a quick deal with no success.
