The Free Trade Agreement (FTA) being negotiated between India and the UK is in the final stages with both sides within finger-touching distance to clinch an agreement, NITI Aayog CEO B.V.R. Subrahmanyam said here on Wednesday.

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The FTA, negotiations for which were launched in January 2022 before being stalled due to general elections in both countries, is aimed at significantly enhancing the estimated GBP 38.1 billion a year bilateral trading partnership.

During the signing ceremony for the new UK-India Infrastructure Financing Bridge (UKIIFB) agreement, both sides were keen to stress that the bilateral partnership is not being held “hostage” to the FTA even as the newly elected governments on both sides remain committed to it.

"I think this is a deal that is in the last slab. The two sides I would say are not even at hand-shaking distance, the fingers are touching. It's just a question of that extra five inches and you can grab the deal,” Subrahmanyam said while addressing a panel discussion on the future of India-UK trade.

"The relationship between two countries should not be hostage to a trade deal… India-UK partnership has many, many dimensions to it – infrastructure finance, climate, technology… FTAs enable a sense of familiarity to get things accelerated, in addition to massive opportunities, not only in goods but in services on both sides. It's a perfect fit, perfect match,” he said.

The UKIIFB, signed between NITI Aayog and City of London Corporation in London on Wednesday, is aimed at facilitating international investments into India's ambitious infrastructure projects and is seen as a sign of the economic partnership moving at pace unencumbered by the FTA talks.

"I'm not betraying any negotiating secrets when I tell you, we believe we are close. But, of course, the proof of the pudding is not just in the eating, but in ensuring that it comes out of the oven at the right time. So, we are in the process of sort of getting the last bits in place and those are always the hard yards," said Indian High Commissioner to the UK Vikram Doraiswami.

"But the FTA, in totality, is a very important part but (only) one part of the larger strategic relationship we seek to have the UK… that includes opportunities such as this UKIIFB to look at the financial services sector and essentially create a long-term viable channel for capital to be deployed profitably in India for the benefit of both economies; to look at technology; to look at research and innovation,” he said.

Ben Mellor, Director at the UK's Foreign, Commonwealth and Development Office (FCDO) India and Indian Ocean Directorate, noted that the newly elected Labour government had the India FTA – talks for which began under the former Conservative regime – as a manifesto commitment.

"It is something that we will seek to get agreement on as soon as possible. I think we need to be very realistic about the prospects and the challenges that still remain to get the deal across the line," said Mellor, referencing the “protectionist instincts” within sections of both economies.

"The deal will deliver economic opportunity, growth and jobs in both our countries. Therefore, it is really important for those of us who are strong believers in the UK-India relationship to continue to make the case for why a good, substantial free trade agreement is in both our country's interests. But an FTA is not the only thing that speaks to that relationship,” he said.

UK Business and Trade Secretary Jonathan Reynolds had announced at the end of July that teams would be “entering negotiating rooms as soon as possible”, with the trade talks expected to pick up from the fourteenth round where they were left off.

Chris Hayward, Policy Chairman of the City of London Corporation, indicated that things are going through a “verification process” of what has been agreed so far and to assess the outstanding issues to take the FDA forward.

“We've just got a new government. They're going to take a bit of time, and it's right that they should have that time to move forward… the aspiration of both countries is to try to arrive at an FTA,” said Hayward, who reiterated the City of London's hopes for the deal to be “heavily focused on the services sector”.