Labour Party's UK Triumph Paves Way for Indo-UK FTA

With the Labour Party set to assume power in the UK, India anticipates the approval of the proposed free trade agreement (FTA) between the two nations, according to economic think tank GTRI. Key issues like the Carbon Border Adjustment Measure and non-tariff barriers remain points of negotiation.

The Labour Party's imminent rise to power in the UK signals potential approval for the Indo-UK free trade agreement (FTA), as noted by economic think tank GTRI on Friday.

Keir Starmer will be instated as the UK's prime minister following a significant majority win in Thursday's parliamentary elections, ousting Rishi Sunak's Conservative Party.

According to GTRI, the Labour Party is expected to acknowledge the considerable advantages of the FTA, which would provide UK exporters access to India's expansive and growing market, despite high tariff barriers.

GTRI Founder Ajay Srivastava expressed optimism that the Labour Party would recognize the immediate benefits for UK exports, as illustrated by historical precedents with ASEAN, Japan, and South Korea's FTAs with India.

The nearly finalized agreement might see minor adjustments, such as a reduced number of visas for Indian professionals, paving the way for its signing potentially by October this year, Srivastava added.

Yet, GTRI emphasized the need for India to address essential issues like the Carbon Border Adjustment Measure (CBAM) and non-traditional subjects such as labor, environment, gender, and intellectual property rights in the FTA.

India must negotiate firmly on these matters to avoid other barriers undermining the benefits of tariff elimination, ensuring a balanced agreement that protects Indian exporters, Srivastava noted.

The bilateral trade between India and the UK rose to USD 21.34 billion in 2023-24 from USD 20.36 billion in 2022-23, highlighting the importance of this agreement.

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