Opinion | Race For India’s Markets: Why UK And EU Are Scrambling For A ‘Trade Deal’
Trump’s return signals an era of increased tariffs, trade wars, and a shift towards domestic economic priorities. For UK, this means it must urgently deepen trade ties elsewhere. To that end, no partner is more crucial than India
The race is on, the competition is real, and time is running out. The United Kingdom and the European Union are locked in a high-stakes battle—each vying to be the first to sign a Free Trade Agreement (FTA) with India. But what’s the urgency?
The answer lies in Washington. With Donald Trump back in the White House, the long-touted “transatlantic unity" that defined Western diplomacy for decades has collapsed. The era of predictable alliances is over, and countries that once relied on America’s backing are now scrambling to diversify their economic and strategic partnerships. Nowhere is this more evident than in the UK’s post-Brexit trade strategy.
related stories
THE UK’S GAMBLE
Since exiting the European Union in 2020, the UK envisioned a future in which it could build independent, dynamic trade relationships, free from EU-imposed constraints. That vision, however, has not materialised as smoothly as hoped. Now, with Trump’s protectionist policies back in play, London realises that time is not on its side. If trade partnerships weren’t secured yesterday, the next best time to build them is now.
That urgency is evident in the UK’s latest moves. Just last week, former British Prime Minister Rishi Sunak met with Indian Prime Minister Narendra Modi, External Affairs Minister Dr S Jaishankar, and Commerce Minister Piyush Goyal. While the visit might have seemed routine, it was anything but. Sunak reportedly pushed for a swift resolution to the stalled FTA negotiations. The urgency became even clearer when newly elected Prime Minister Keir Starmer sent his Business Secretary, Jonathan Reynolds, to India within days of Sunak’s meetings.
The message was unmistakable: the UK wants a trade deal, and it wants it now.
But why this desperation? The answer is simple—America’s traditional allies can no longer count on the US to uphold old economic arrangements. Trump’s return signals an era of increased tariffs, trade wars, and a shift towards domestic economic priorities. For the UK, this means it must urgently deepen trade ties elsewhere. To that end, no partner is more crucial than India.
THE EUROPEAN UNION’S COUNTERMOVE
The UK, however, is not alone in seeking an FTA with India. As British officials rushed to New Delhi, the European Commission prepared to make its own play. Unlike the UK’s delegation, the EU’s efforts are being led by none other than Commission President Ursula von der Leyen and her entire college of commissioners. The sheer scale of this diplomatic push underlines the importance Brussels places on securing its own deal with India.
Such high-level engagements are rare, but the EU’s motivations are clear. With the US becoming increasingly unreliable and China posing long-term economic risks, Europe sees India as a critical partner in its strategy to de-risk its supply chains. In other words, India is not just a trade partner—it is an economic lifeline.
The timing of these visits underscores the reality that the UK and EU are in direct competition. If the UK manages to sign an FTA first, it could secure preferential access to India’s vast market, setting a precedent that would make EU negotiations more difficult. A UK-India deal would establish a framework that could make it harder for the EU to demand more favourable terms later. For Brussels, that is a risk it cannot afford to take.
THE STICKING POINTS
Despite the flurry of diplomatic activity, the UK-India FTA is still mired in a few key disagreements. The two major sticking points are visas for short-term Indian workers in the UK and India’s demand for social security payouts for Indians who have worked in the UK. Both issues remain contentious, having stalled negotiations in previous rounds.
Read More: Bold, Clear and Resolute: Understanding India’s Approach to FTA with UK
This is not the first time the UK has attempted to secure an FTA with India. Former Prime Ministers Boris Johnson and Liz Truss both set “Diwali deadlines" for a deal, only to see those deadlines come and go. Rishi Sunak managed to make significant progress, but elections in both countries put negotiations on hold. Now, with Labour in power, the push to finalise a deal is more intense than ever.
And why wouldn’t it be? India is projected to have the highest growth rate in the G20 for the next five years. The Indian middle class—expected to reach 95 million by 2035—is a demographic the UK is eager to tap into. For British businesses, securing a deal now means securing long-term access to one of the most lucrative consumer markets in the world.
INDIA’S STRATEGIC PLAY
India, for its part, is not rushing into a deal blindly. It has already begun making calculated moves to strengthen its hand in trade negotiations. Following Trump’s return, India announced reductions in import duties on cars, motorcycles, and select bourbon whiskey—measures that serve a dual purpose. First, they increase India’s bargaining power with the US. Second, they address core concerns raised by the UK in FTA talks.
Additionally, India is considering lowering duties on Scotch whisky, a long-standing demand from British negotiators. But India is not simply giving in—it is also pushing for key concessions. One major demand is an exemption from the UK’s Carbon Border Adjustment Mechanism, a tax on carbon-intensive imports such as steel, glass, and fertilisers. Without this exemption, Indian exports would be placed at a competitive disadvantage in the UK market.
THE BIGGER PICTURE
Once finalised, the India-UK FTA will be one of India’s most complex trade agreements to date. It will serve as a template for future deals and mark a significant shift in India’s global trade strategy. Historically, India has been reluctant to enter into large trade agreements, as seen in its 2019 decision to exit the Regional Comprehensive Economic Partnership (RCEP) due to concerns over China’s dominance.
However, India has ambitious trade goals. With a target of surpassing $1 trillion in exports by 2030, any FTA it signs must align with this broader vision. That means securing favourable terms, ensuring market access for Indian businesses, and protecting domestic industries from unfair competition.
THE ROAD AHEAD
In this high-stakes geopolitical contest, the UK and EU are scrambling to secure India’s partnership. With global alliances shifting and economic uncertainties rising, New Delhi has become the focal point of Western trade ambitions. In a world where traditional economic powerhouses are turning inward, India is emerging as the stable, high-growth market that everyone wants a piece of.
As negotiations continue, one thing is clear: India is no longer just an important trade partner—it is the marketplace of the future. The question is, who will get there first?
Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
- Location :
- First Published: