India-UK Trade Deal (AI image)
India-UK free trade deal: In a historic step, the India-UK free trade agreement (FTA) was signed in the presence of PM Narendra Modi and UK PM Keir Starmer. The trade deal which was agreed upon in May this year, was signed on Thursday during PM Modi’s visit to the United Kingdom.The agreement has been finalized with an aim to enhance bilateral trade to $120 billion by 2030, effectively doubling the current trade volume between both nations.The free trade agreement signed today will help in facilitating reduced tariffs on exports of labour-intensive goods including leather, footwear and clothing, whilst reducing import duties on British whisky and automobiles.The trade agreement was formalised with Prime Minister Narendra Modi and British Prime Minister Keir Starmer in attendance, with Commerce and Industry Minister Piyush Goyal and British counterpart Jonathan Reynolds signing the document. The agreement requires the British Parliament’s endorsement before implementation, a process anticipated to take approximately one year, according to a PTI report.Also Read | India-UK trade deal: How will the Free Trade Agreement benefit India? Top 10 takeaways for Indians
India-UK Trade Deal: All About The FTA
- The agreement ensures that 99% of exports from India would receive duty-free access to British markets.
- On a braid basis tariffs on UK’s exports to India will come down from 15% to 3%, implying cheaper goods available for Indians.
- Such bilateral trade arrangements typically involve both doing away with or substantially lowering customs duties on the majority of traded goods. Additionally, they aim to simplify regulations in order to encourage service trade and mutual investments.
- India’s agricultural industry is positioned to benefit in a big way. India’s global agricultural exports stand at $36.63 billion, whilst the UK’s total agricultural imports are $37.52 billion. However, UK’s imports from India are merely $811 million. The British market presents lucrative opportunities for specialised Indian agricultural products, including tea, mangoes, grapes, spices and seafood items, amongst others.
- The India-UK FTA has sections addressing different aspects of trade; this includes goods, services, innovation, government procurement, and intellectual property rights.
- The FTA’s key provisions include halving import duties on UK-produced whisky and gin from 150% to 75% to begin with, followed by a further decrease to 40% within a decade.
- Additionally, tariffs on automobiles will see a big reduction from over 100% to 10%. This is subject to quota restrictions.
- The agreement also aims to facilitate market access and cost-effective trade for businesses and Indian consumers via reduced import duties on various products. These include cosmetics, aerospace components, lamb, medical equipment, salmon, electrical machinery, soft drinks, chocolate and biscuits.
- The agreement will create export prospects for domestic sectors that employ substantial workforce, encompassing textiles, marine products, leather goods, footwear, sports equipment and toys, gems and jewellery, engineering products, automotive components and engines, alongside organic chemicals.
- The services component of the trade deal will facilitate the movement of diverse professionals, including independent professionals—such as yoga instructors, musicians, and chefs—business visitors, investors, contractual service suppliers, intra-corporate transferees, as well as their partners and dependent children who are granted the right to work.
India and the UK have also finalized discussions on the Double Contribution Convention Agreement, which is also known as the social security agreement. This arrangement would mean that Indian professionals working temporarily in Britain will not have to make duplicate payments towards social security funds.India’s exports to the UK saw a growth of 12.6% reaching $14.5 billion, whilst imports showed an increase of 2.3% to $8.6 billion in 2024-25.The trade volume between India and the UK expanded to $21.34 billion in 2023-24, showing an improvement from $20.36 billion in 2022-23.
