UK-India free trade agreement negotiations: Key priorities for the financial and related professional services

The UK and India enjoy a strong trade and investment partnership. A Free Trade Agreement that liberalises trade in services by easing restrictions on UK businesses operating in India, securing digital trade, fostering regulatory co-operation, and supporting more movement of business personnel could bring significant benefits to businesses and consumers in both countries.

The UK should seize the opportunity to make short-term business mobility easier by allowing employees to enter the UK for short term productive activity without needing a work visa. This would strengthen the UK’s competitiveness and capacity for innovation and help underpin the UK’s status as the world’s leading international financial centre.

Key UK/India trade facts

UK financial services exports to India decreased from £304m in 2016 to £298m in 2020, driven mainly by a reduction in insurance and pension export
UK services exports to India amounted to almost £3.9bn in 2020, with financial services making up 7.8% of that total
India ranks 30th as an export destination for UK financial services exports
given that India’s GDP is projected to grow by an annual average of 6.7% a year over 2022-26 (according to IMF projections), there is great potential for future trade between the two countries.

Core UK-industry objectives for a future UK/India FTA

Freedom for UK businesses to operate in India

India imposes strict limitations on the ability of UK businesses to own and run operations in India. The UK should seek to remove barriers to UK financial and professional services businesses operating in India such as foreign investor equity caps, joint venture requirements, economic needs tests and nationality and residency requirements for business personnel.

Digital trade

India is a critical node within global digital networks. Many UK-based FRPS business have located technology operations in India. A UK-India FTA should safeguard the ability of UK businesses to move data to and from India. The UK should secure commitments from India to:

limit data localisation measures to clearly defined cases (including localisation measures relating to financial data)
recognise the validity of e-signatures and electronic contracts
Protect digital IP relating to software, source codes and encryption technologies
avoid customs duties on electronic transmissions
address market share restrictions for the processing of electronic payments by UK online payment service suppliers via India’s United Payment Interface (UPI) system.

Business personnel mobility

The UK and India should agree to allow each other’s businesses to post business personnel to the partner country with fewer restrictions and for longer periods. This includes:

longer lengths of stay for inter-corporate transferees, investors, business visitors and service providers
faster turnaround times and reduced administrative costs for business visas
clearer definitions of who can get a business visa - spouses and children should be able to accompany key workers.

Regulatory co-operation

Most barriers to trade in financial and related professional services are regulatory. The UK should use an FTA to create a framework for stronger UK-India regulatory cooperation and:

include a commitment for the UK and India to regularly hold financial regulatory dialogues that include industry representation (building on the UK-India Economic and Financial Dialogue and the UK-India Financial Markets Dialogue)
encourage regulators to achieve mutual compatibility of UK and Indian financial services regulatory frameworks where appropriate
encourage UK and Indian regulators to consider aligned approaches to green and sustainable finance and collaborate on issues like FinTech, cyber-security, and AI as outlined in the 2030 Roadmap for India-UK future relations.

Mutual Recognition of Professional Qualifications

The UK and India should use the FTA to seek mutual recognition of professional qualifications frameworks appropriate to each sector of financial and professional services. The frameworks should provide a clear path for the recognition of UK professional qualifications when UK professionals seek to enter Indian regulated professions.

Investment protection

UK investors in India should be protected against expropriation or government action restricting the value of their investment. An FTA should introduce measures that protect UK investments, provide dispute resolution mechanisms in the event of investment related disputes, and guarantee adequate, effective and prompt compensation to investors whose assets have been expropriated.

Public procurement

The UK should secure market access for UK FRPS to Indian public procurement, and encourage India to accede to the WTO Government Procurement Agreement 2012 and to liberalise its public procurement markets that relate to services.