India and the UK can work on a Free Trade Agreement (FTA) only after the latter is officially out of the European Union (EU), but the two countries have set up a joint working group to deliberate upon ways to strengthen commercial relationship.

The decision to set up the working group was taken at a meeting between UK Secretary of State for International Trade Liam Fox and Commerce & Industry Minister Nirmala Sitharaman on Monday.

“We have decided to set up a working group which can go into the details of the kind of commercial relationship that can be built and how it could be strengthened. However, we cannot work on an FTA till the UK is still part of the EU. Only when it (the UK) comes out, would a trade pact be possible,” Sitharaman told reporters after the meeting.

India is already negotiating an FTA with the EU, although talks are not going on smoothly. With the UK deciding to exit the EU, a separate FTA has to be forged with the country.

Finance Minister Arun Jailtey, in his meeting with Fox on Monday, talked about officials from both countries jointly exploring creation of an India-UK sub-fund under the National Investment and Infrastructure Fund (NIIF) umbrella.

Fox also announced his participation and the UK’s commitment to the Joint Economic and Trade Committee (JETCO) to be held on November 7 alongside the ‘India-UK TECH Summit’.

Bilateral trade between India and the UK was $14 billion in 2015-16 which was slightly lower than the previous year’s total trade of $14.33 billion.

The UK Secretary of State for International Trade is currently on a three-day visit to New Delhi and Mumbai.

“This is the first visit by the new Secretary of State in his current role and his visit will boost UK-India bilateral commercial ties and mark India as a key strategic partner across trade, investment and defence,” according to an official statement from the Finance Ministry.

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