Rishi Sunak has held fresh talks with Indian prime minister Narendra Modi about stalled negotiations over a free trade deal between London and New Delhi.
The Indian government had been keen to sign new trade terms with the UK before the start of 2024 and ahead of national elections in spring.
The mood music after the Prime Minister’s visit to the Indian capital for the G20 summit in September appeared to be pointing to a breakthrough, with Mr Sunak invited back for an “early” return visit to India by Mr Modi’s government.
But with India’s general election approaching next month, a breakthrough on a deal appears unlikely to occur before a new government is elected.
It is understood the call on Tuesday between the two leaders involved ironing out some “outstanding issues” that had cropped up during the negotiations, suggesting a deal is not imminent.
The phone conversation between Mr Sunak and Mr Modi comes in the same week as New Delhi clinched a deal with the four nations that make up the European Free Trade Association (Efta) — Norway, Switzerland, Iceland and Liechtenstein — in a pact India says will secure close to £78 billion of investment into the country.
Issuing a readout of the discussion between the two premiers, a Downing Street spokeswoman said: “The leaders welcomed the thriving partnership between the UK and India and discussed recent progress on free trade agreement negotiations.
“They agreed on the importance of securing a historic and comprehensive deal that benefits both countries.
“The Prime Minister reiterated the importance of reaching an ambitious outcome on goods and services.
“They agreed to remain in close contact and looked forward to further progress on trade talks.”
Negotiations over a UK-India trade deal, an agreement that could grant more favourable access for British companies to a market of 1.4 billion people, has dragged on for two years.
Its completion is seen as a major post-Brexit prize by the Conservative UK Government.
When he was prime minister, Boris Johnson said he wanted a deal done by October 2022 to coincide with Diwali celebrations.
Mr Sunak’s administration has declined to set a target date for signing off on an agreement.
Trade minister Greg Hands told MPs last week that the “most important thing is what is in the deal, rather than the date that it is delivered”.
He said: “We remain in round 14 and we recently welcomed government of India negotiators to London.
“The prize remains large — with tariffs as high as 150% for whisky and 125% for autos — and we want to ensure that we get our key service sectors able to export into a market of 1.4 billion people.”
No 10 could not say whether the Prime Minister on Tuesday broached the announcement by Mr Modi’s government to implement a 2019 citizenship law that excludes Muslims, a move that comes just weeks before the Hindu nationalist leader seeks a third term in office.
Mr Sunak, who has Indian heritage, is known to have a strong working relationship with Mr Modi.
While in Delhi in September, Mr Sunak and Mr Modi demonstrated their cordial relationship with a hug and back slapping before their bilateral meeting.
The Prime Minister’s wife is Akshata Murty, the daughter of NR Narayana Murthy, the billionaire co-founder of Indian IT giant Infosys, one of India’s largest employers.
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