India and UK Ink Landmark Free Trade Agreement, Targeting Double Bilateral Trade by 2030
After extensive negotiations, India and the United Kingdom today formally signed a landmark Free Trade Agreement (FTA) in London, marking a significant milestone in their economic relationship. The agreement, signed by Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, aims to substantially boost bilateral trade and investment, with an ambitious target of doubling trade to $120 billion by 2030.
This comprehensive agreement represents India's first major FTA in over a decade and the UK's fourth significant trade deal since its departure from the European Union in 2020.
Key Provisions and Benefits:
The FTA encompasses a wide range of sectors, with significant implications for both goods and services trade:
Tariff Reductions - Goods:
Indian Exports to UK: The agreement ensures that 99% of Indian exports will receive duty-free access to the UK market, covering nearly the entire trade value. This is a major win for India's labor-intensive sectors, including:
Textiles and apparel
Leather goods and footwear (tariffs cut from up to 16% to zero)
Gems and jewelry
Marine products (e.g., shrimp, tuna, fishmeal, feeds, previously taxed between 4.2% and 8.5%, now duty-free)
Engineering goods and auto components
Sports equipment and toys
Organic chemicals
Agricultural products like fruits, vegetables, cereals, turmeric, pepper, cardamom, and processed foods.
UK Exports to India: India will significantly reduce tariffs on nearly 90% of UK goods, bringing the average Indian import tariff on UK products down from 15% to approximately 3%. Key beneficiaries include:
Scotch Whisky and Gin: Import duties will be halved from 150% to 75% immediately, with a further reduction to 40% within a decade. This is expected to open up the substantial Indian market for British distillers.
Automobiles: Tariffs on certain UK-made automobiles will see a drastic reduction from over 100% to 10%, subject to quota restrictions. This will make premium British cars more competitive in India.
Other Products: Duties will also be cut on various other British products, including cosmetics, aerospace components, lamb, medical equipment, salmon, electrical machinery, soft drinks, and chocolates and biscuits.
Services Sector and Professional Mobility:
The agreement includes robust provisions to facilitate the movement of professionals, opening new avenues for both Indian and British service providers.
Easier Entry for Indian Professionals: Indian independent professionals, such as yoga instructors, musicians, chefs, business visitors, investors, and contractual service suppliers, will find it easier to work temporarily in the UK. This includes provisions for their partners and dependent children. Over 60,000 Indian tech professionals are projected to benefit from eased mobility.
Social Security Exemption: A significant win for Indian professionals is the inclusion of a Double Contribution Convention Agreement (social security pact). This will exempt Indian workers and their employers from paying into the British social security system for up to three years, potentially saving around Rs 4,000 crore (approximately $463 million) annually.
UK Services Access: UK companies in financial services, professional services (consulting, engineering), and IT will gain enhanced access and regulatory cooperation in the Indian market.
Investment and Other Areas:
Increased Investment: The FTA is expected to significantly boost cross-border investment, creating new opportunities and jobs in both countries. UK officials estimate the deal will increase UK exports to India by almost 60% in the long term, adding an estimated £15.7 billion of UK exports to India by 2040 projections.
Government Procurement: The agreement includes a government procurement section, allowing British firms to bid for federal-level contracts in India above a certain value in non-sensitive sectors, opening up a large potential market.
Innovation and IPR: Chapters addressing innovation and intellectual property rights aim to foster greater collaboration and protection in these areas.
Simplified Customs: Measures include simplified processes for qualified traders, paperless customs procedures, electronic authentication, and a commitment to clearing goods within 48 hours.
Economic Projections and Impact:
Bilateral Trade Target: The primary goal is to double bilateral trade to $120 billion by 2030, with an additional $40 billion projected by 2040.
Immediate Boost: The deal is projected to boost annual bilateral trade by around $34 billion initially.
Job Creation: The UK government anticipates the deal will create over 2,200 jobs nationwide as Indian firms expand their UK operations, and British workers could see a wage hike of up to £2.2 billion annually.
Consumer Benefits: Consumers in both countries are expected to benefit from cheaper and more varied access to goods and services due to reduced tariffs and eased trade barriers.
Significance:
This FTA is hailed by both sides as a "historic" and "watershed moment." For the UK, it represents its most economically significant bilateral trade deal since leaving the EU, aligning with its post-Brexit strategy of forging new global trade partnerships. For India, it marks a crucial step in expanding its global trade footprint and securing preferential market access for its rapidly growing economy and labor-intensive industries. The agreement's successful conclusion, after numerous rounds of complex negotiations, signals a strong commitment from both governments to deepen economic ties.
I'm Aisha shehu
Talksocialtalka News
