India and the UK have reaffirmed their commitment to advancing their bilateral relations in the face of the shifting global trade system. This includes accelerating discussions for a mutually advantageous Free Trade Agreement (FTA) and Bilateral Investment Treaty (BIT).

This was the primary outcome of the “13th Economic and Financial Dialogue” held in London, which was co-chaired by Union Finance Minister Nirmala Sitharaman and UK Chancellor of the Exchequer Rachel Reeves.

A joint statement released following the event read, “The UK side was pleased to update on its forthcoming Industrial Strategy, where partnership can support the Industrial Strategy’s priority growth-driving sectors, such as advanced manufacturing and life sciences, where UK expertise and research capability can complement India’s emerging role as a global manufacturing hub, as well as in clean energy, professional and business services, financial services, the creative industries, and defense to support jobs and economic growth.”

In order to improve connections between industrial sectors and boost supply chains, both parties are eager for the “India-UK Defence Industrial Roadmap” to be signed.

In recent years, India and the UK have embraced the financial services industry and pledged to cooperate to expand it even further. The joint statement read, “Our teams will meet for the next Financial Markets Dialogue (FMD) in London later this year. The FMD held in GIFT City IFSC, India, in December 2024, provided an opportunity to deepen our cooperation across banking, insurance, pensions, capital markets, and sustainable finance.”

The UK applauded the authorization given to GIFT IFSC insurance businesses to make foreign investments as well as the proposal being considered to allow GIFT IFSC pension companies to do the same.

Both parties agreed to cooperate in order to increase opportunities and establish a supportive policy environment for further expansion of the role that UK bond markets may play in assisting Indian corporations with capital-raising, especially through rupee-denominated Masala Bonds.

In addition, they welcomed India’s decision to allow the opening of rupee accounts in foreign countries, talked about the possibility of further internationalization of the Indian rupee, and decided to investigate how London, a major international financial hub and hub for foreign exchange, might help with the internationalization of India’s currency.

We came to the conclusion that the UK asset management industry can assist growing opportunities for Indian investors to access international capital and supplement the UK-India Infrastructure Financing Bridge. According to the joint statement, “both sides agree to work together on a supportive policy framework and to use the next Financial Markets Dialogue to discuss this further.”

Both India and the UK acknowledged the value of transition financing in raising funds to promote sustainable development. Both parties applauded each other’s efforts on this matter, including the Transition Finance Market Review, which was commissioned by the UK government.

“Our shared goals are to boost investment, maintain economic stability, and change our economies to promote growth and prosperity in both of our nations. With bilateral trade of over 40 billion pounds and substantial foreign direct investment stocks in both directions, we are proud of our robust economic alliance,” the statement read.