• India and UK have finalized approximately 90% of their free trade agreement, with 23 of 26 chapters completed.
  • Sticking points include carbon taxes, rules of origin, and market access for key sectors like EVs and Scotch whisky.
  • Negotiators aim for completion by fall 2025, which would create new opportunities in India's 1.4 billion-person market.

Progress Amid Persistent Hurdles

India and the UK have reached tentative agreement on most elements of a comprehensive free trade deal, though several thorny issues continue to delay finalization. Negotiators have wrapped up 23 of 26 chapters covering goods, services, and intellectual property, with more than 75% of the text legally vetted, according to officials familiar with the talks.

Chancellor Rachel Reeves and Finance Minister Nirmala Sitharaman acknowledged the substantial progress during public remarks last month. "We're closer than ever to an agreement that will benefit businesses and consumers in both nations," one UK trade official said, speaking on condition of anonymity because negotiations are ongoing.

Sticking Points

The remaining disagreements center on Britain's proposed carbon border tax, which India wants an exemption from, and rules governing product origins. Sector-specific disputes linger over tariffs for electric vehicles, Scotch whisky, and pharmaceuticals. The UK is also pushing for greater access to India's services markets, particularly in telecom, legal, and financial services.

Parallel negotiations on a bilateral investment treaty have further complicated matters, with disagreement over how long legal protections should last after investments end. "The so-called sunset clause remains a major hurdle," an Indian commerce ministry official said.

Path Forward

Despite the outstanding issues, both sides appear committed to reaching a deal by fall 2025. The agreement would significantly reduce tariffs on UK exports like whisky and luxury cars while giving British firms better access to India's vast consumer base. For India, improved mobility provisions for professionals could prove a key win.

"We're down to the toughest issues now," said a person briefed on the talks. "But there's real momentum to get this across the finish line in the coming months."