India and UK reaffirm free trade agreement, support supply chains

New Delhi:  Amid the changing world trade order, India and the UK have reaffirmed their commitment to furthering the bilateral relations between the two nations, including continuing negotiations at pace towards a mutually beneficial Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT).

This was the key outcome of the ‘13th Economic and Financial Dialogue’ in London, co-chaired by Union Finance Minister Nirmala Sitharaman and Rachel Reeves, Chancellor of the Exchequer, UK.

“The UK side was pleased to update on its forthcoming Industrial Strategy, where partnership can support the Industrial Strategy’s priority growth-driving sectors, such as advanced manufacturing and life sciences, where UK expertise and research capability can complement India’s emerging role as a global manufacturing hub, as well as in clean energy, professional and business services, financial services, the creative industries, and defence to support jobs and economic growth,” according too a join statement issued after the event.

Both sides look forward to the signing of the ‘India-UK Defence Industrial Roadmap’ to strengthen ties between industrial sectors and support supply chains.

India and the UK also welcomed the financial services trade over recent years and commit to work together to grow this further.

“The Financial Markets Dialogue (FMD) held in GIFT City IFSC, India, in December 2024, provided an opportunity to deepen our cooperation across banking, insurance, pensions, capital markets, and sustainable finance, and our teams will meet for the next FMD in London later this year,” according to the joint statement.

The UK welcomed the approval granted to insurance companies in GIFT IFSC to invest overseas and the proposal under consideration to enable pension companies in GIFT IFSC to invest overseas.

Both sides noted the role that UK bond markets can play in supporting capital-raising for Indian corporates, including through rupee-denominated Masala Bonds, and agree to work together to boost opportunities and create supportive policy framework for expanding this further.

They also discussed the potential for greater internationalisation of the Indian rupee, welcomed India permitting the opening of rupee accounts in overseas jurisdictions, and agreed to explore the role that London as a global financial centre and hub for foreign exchange can play in supporting the internationalisation of India’s currency.

“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.

–IANS