New Delhi/London – India and the United Kingdom have reiterated their commitment to strengthening bilateral economic relations, underlining their intent to accelerate ongoing negotiations towards a comprehensive Free Trade Agreement (FTA) and a Bilateral Investment Treaty (BIT). This renewed partnership was confirmed during the 13th India-UK Economic and Financial Dialogue held in London, co-chaired by India’s Finance Minister Nirmala Sitharaman and UK Chancellor of the Exchequer Rachel Reeves.
The dialogue, convened amid a shifting global trade landscape, focused on aligning strategic economic goals and reinforcing collaboration across vital sectors including finance, clean energy, manufacturing, defence, and sustainable development. Both countries expressed confidence that closer economic alignment would generate more robust trade and investment flows, create high-quality jobs, and foster innovation-led growth.
Accelerating Free Trade and Investment Agreements
At the heart of the discussions was the commitment to intensify negotiations towards finalising a mutually beneficial Free Trade Agreement. Talks on the FTA, which began in early 2022, have made considerable progress, and both sides stressed the urgency of resolving remaining issues. Officials reiterated their objective to shape a modern and balanced trade pact that caters to evolving economic needs and reflects shared democratic values.
The Bilateral Investment Treaty, which is being negotiated concurrently, aims to enhance legal certainty for investors and expand two-way investment flows. The treaty is expected to provide a stable and transparent investment environment, benefiting companies from both nations.
Boosting Strategic Sector Partnerships
The UK presented its forthcoming Industrial Strategy, which identifies priority growth sectors such as advanced manufacturing, life sciences, clean energy, and creative industries. These sectors align with India’s goals under initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’, creating potential for deepened industrial linkages.
Officials noted that India’s emergence as a global manufacturing hub and the UK’s strengths in research and innovation make for a complementary economic partnership. The two countries are also moving forward with the India-UK Defence Industrial Roadmap, which aims to foster joint ventures and strengthen supply chain resilience in the defence sector.
Financial Services and Capital Markets Cooperation
The dialogue also emphasised expanding collaboration in financial services. The Financial Markets Dialogue (FMD), last held in December 2024 in GIFT City, was hailed as a crucial platform for deepening cooperation across banking, insurance, pensions, capital markets, and sustainable finance.
The UK lauded India’s decision to allow insurance companies in GIFT IFSC to invest overseas, a move likely to enhance the competitiveness of Indian financial firms. A similar proposal enabling pension firms to invest overseas is currently under review.
Additionally, both nations explored the potential of the UK’s deep bond markets to support Indian corporate fundraising, including through Masala Bonds. They also expressed mutual interest in creating a supportive policy framework to expand the issuance of such rupee-denominated bonds.
Internationalising the Indian Rupee
A key discussion point was the internationalisation of the Indian rupee. Both sides acknowledged progress made by India in allowing the opening of rupee accounts in foreign jurisdictions, a move that could pave the way for broader use of the currency in cross-border transactions.
The UK, with London as a global financial hub, is seen as a strategic partner in this effort. Officials agreed to explore the role London can play in facilitating rupee trading, thereby supporting the Indian currency’s international acceptance and enhancing liquidity in global markets.
Infrastructure Finance and Investment Flows
The UK highlighted the potential of its asset management sector in advancing infrastructure finance through the UK-India Infrastructure Financing Bridge. Both governments committed to working together on policy frameworks that can enable Indian investors to access global capital markets more efficiently.
This includes collaborative efforts in transition finance, a key instrument in mobilising funds for low-carbon and sustainable development projects. India and the UK welcomed each other’s initiatives in this space, including the UK’s Transition Finance Market Review, which outlines pathways for enabling green investments in emerging markets.
Strengthening Trade Foundations
The reaffirmation of economic ties comes against the backdrop of over £40 billion in bilateral trade and substantial foreign direct investment in both directions. This robust economic engagement underscores the shared ambition of both governments to enhance trade predictability, reduce market access barriers, and unlock new growth opportunities.
Discussions also touched on professional and business services, where both countries aim to simplify mutual recognition of qualifications, support regulatory alignment, and facilitate talent mobility. The growing convergence in financial regulations and technology-enabled services was seen as a critical area to nurture future growth.
Charting a Collaborative Future
The success of the 13th Economic and Financial Dialogue reinforces the momentum behind India-UK economic collaboration. As both economies face dynamic global challenges — from climate change to technological disruption — the willingness to cooperate in strategic sectors and build resilient supply chains reflects a forward-looking approach to partnership.
The joint statement concluded by affirming the shared ambition for economic stability, deeper investment channels, and modernised economic reforms that support inclusive growth. With both sides aligning on multiple fronts, the India-UK relationship appears poised to evolve into a more comprehensive economic partnership in the years ahead.
The reaffirmation of the Free Trade Agreement and broader economic cooperation between India and the UK marks a significant step in redefining their bilateral engagement. By aligning policy goals, reinforcing financial and industrial ties, and focusing on sustainable development, both nations are laying a strong foundation for a resilient and mutually advantageous economic future. The outcomes of the 13th Economic and Financial Dialogue reflect not only diplomatic goodwill but also the practical pursuit of shared prosperity in an increasingly interconnected world.
