RBI Governor welcomes India-UK free trade deal

Reserve Bank of India Governor Sanjay Malhotra welcomed the newly signed free trade agreement (FTA) between India and the United Kingdom.  It will benefit multiple sectors of the Indian economy, particularly manufacturing and services, he said.

Speaking at the FE Modern BFSI Summit, Malhotra emphasised the need for more bilateral trade deals amid the global decline of multilateralism. He revealed that trade negotiations with the United States are in “advanced stages.” He noted several other pacts are under discussion.

“Hopefully, this FTA with the UK helps us. That’s the path forward now, as multilateralism seems to be on the back burner,” he said.

The FTA, signed during Prime Minister Narendra Modi’s recent UK visit, is expected to significantly open up markets for both countries. A major highlight of the agreement is the inclusion of public procurement provisions.

According to Commerce Secretary Sunil Barthwal, the pact grants Indian companies non-discriminatory access to the UK’s $122 billion public procurement market—a first under the UK’s social value regime. In return, UK suppliers can tap into India’s $114 billion procurement market, albeit with certain thresholds and conditions.

Key features include:

* Indian suppliers will enjoy access to UK central government departments and select public institutions.
* UK firms can participate as Class-II suppliers in India, provided at least 20% of content is sourced from the UK.
* Indian suppliers remain Class-I, requiring over 50% local content.

This is India’s second FTA with a chapter on public procurement, following its 2022 agreement with the UAE.