On Thursday, during Prime Minister Narendra Modi’s visit to the United Kingdom, India and the UK finalised a significant free trade agreement, marking a historic moment in their bilateral relations. The agreement, which took nearly three years of negotiations, is expected to enhance trade between the two nations by approximately $34 billion annually.
The deal was officially signed by Commerce Minister Piyush Goyal and his UK counterpart Jonathan Reynolds in the presence of Modi and UK PM Keir Starmer. This landmark agreement will lead to reduced tariffs on numerous products imported from the UK, greatly benefiting India’s export sector.
Prime Minister Modi said exquisite Indian textile products, footwear, gems and jewellery and engineering goods will gain market access to the UK. The opportunities for agricultural products and processed foods will also get an impetus. All of this will benefit our people, especially farmers and women, Modi said.
The FTA will boost the Ease of Doing Business, reduce the cost of doing business and enhance the confidence of doing business. Investment linkages are all set to get more vigour, he said.
It’s equally gladdening that we’ve released Vision 2035 to deepen our Comprehensive Strategic Partnership. This will focus on sectors like defence, education, people-to-people ties, semiconductors and sustainable development, he said.
Goyal emphasized that the agreement allows for duty-free access for around 99% of Indian exports, potentially unlocking “nearly $23 billion in opportunities for labor-intensive sectors, heralding a new era of inclusive and gender-equitable growth.”
Here are some things which will become more affordable due to this trade deal:
Aerospace Parts and Medical Devices: Indian consumers and industries will gain access to a range of UK-made products, including medical devices and aerospace components, at more competitive prices.
Soft Drinks and Cars: Indian customers will also enjoy better availability of British goods such as soft drinks, cosmetics, and cars, as average tariffs on UK products are set to decrease from 15% to 3% once the FTA is implemented.
Reduced Tariff on Scotch: The agreement simplifies the process for British exporters by halving tariffs on whisky, reducing them from 150% to 75% initially and subsequently lowering them to 40% over 10 years.
Indian businesses and freelancers will have access to 36 service sectors in the UK without having to pass an ‘Economic Needs Test’. Furthermore, Indian professionals can work in 35 UK sectors for two years, even without an office, and they will be exempt from UK social security contributions for three years under this agreement.