Prime Minister Narendra Modi during a bilateral meeting with UK Prime Minister Keir Starmer
Credit: PTI Photo
New Delhi: After missing multiple deadlines, India and the UK on Tuesday announced the successful conclusion of a “mutually beneficial” free trade agreement (FTA) that will cut tariffs on bilateral trade to zero on a majority of traded items.
Apart from the FTA deal, the two countries have also agreed to sign a social security agreement called “Double Contribution Convention”.
Under this agreement, the UK has agreed to provide an exemption to Indian workers who are temporarily in Britain and their employers from paying social security contributions for a period of three years.
“This will make Indian service providers significantly more competitive in the UK,” the Ministry of Commerce and Industry said in a statement.
Prime Minister Narendra Modi praised the deal.
“These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,” Modi posted on X.
Under the FTA deal, the two countries have agreed to eliminate tariffs on a majority of products. The Commerce Ministry claimed that “India will gain from tariff elimination on about 99% of the tariff lines covering almost 100% of the trade value, offering huge opportunities for increase in the bilateral trade between India and the UK.”
As per a statement issued by the UK Department of Business and Trade, India has agreed to cut tariffs on 90% of imports from the UK, with 85% of those becoming tariff-free within the next decade.
Britain-made whisky, gin, cars, cosmetics and food items will get substantially cheaper in India. As part of the deal, India has agreed to halve tariffs on whisky to 75% from 150% immediately, and bring it further down to 40% by the tenth year. Tariffs on cars will be cut to 10% under a quota system.
“We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy,” UK Prime Minister Keir Starmer said in a statement.
The two leaders announced the deal after holding a telephone conversation.
“Both agreed that the landmark agreements between the two big and open market economies of the world will open new opportunities for businesses, strengthen economic linkages, and deepen people-to-people ties,” as per a statement issued by the Prime Minister’s Office.