<p class="bodytext">The India-UK Free Trade Agreement (FTA), finalised after long and hard negotiations, is an important deal that will benefit the economies of both countries. India’s economy is larger than the UK’s – the fourth largest against the sixth – but the UK economy is more developed. The agreement is particularly relevant against the backdrop of the tariff war unleashed by US President Donald Trump. Trade deals have become more important after the World Trade Organisation (WTO) became dysfunctional. The deal may be the most comprehensive FTA entered into by India with a major country. India has signed important trade agreements with Australia and the UAE and is negotiating deals with the US, the EU, and other countries. These will help to raise India’s global trade profile. The India-UK deal took three years to finalise and Prime Minister Narendra Modi has described it as a “historic milestone”.</p>.India-UK FTA may dampen Indian ‘spirits’ in the short-term.<p class="bodytext">The bilateral trade between the two countries is valued at about $60 billion and is estimated to double by 2030. Indian companies’ access to British markets would be almost tariff-free, and Indian consumers would benefit from a gradual reduction in tariffs on imports from the UK. The deal will eliminate tariffs levied by the UK on about 99% of products, including those from sectors such as textiles, footwear, and manufacturing industries like electrical machinery. There will be major gains for India in the services sector and the UK will provide greater access to service providers in many sectors. Movement of professionals has been eased but the deal is short of India’s expectations in that respect. The UK government is not in a position to make many concessions on the matter. Skilled Indian workers in the UK and their employers will now be exempt from paying social security contributions for three years. India has lowered tariffs on whiskey and gin to 75% and further to 40% over 10 years. Automotive tariffs have been reduced. Duties have also been lowered for cosmetics, aerospace products, medical devices etc. The FTA is expected to deliver a 0.1% boost every year to the UK’s economy in the long term. The ratification of the deal will boost investments by both countries in each other’s economy.</p>.<p class="bodytext">The agreement has no provision to counter the UK’s proposed carbon tax, but New Delhi has preserved its right to retaliate or rebalance concessions if it impacts domestic exports. Negotiations are continuing on the bilateral investment treaty which was expected to be signed along with the FTA. There are some important disagreements, including on taxation, to be bridged before it is finalised.</p>
<p class="bodytext">The India-UK Free Trade Agreement (FTA), finalised after long and hard negotiations, is an important deal that will benefit the economies of both countries. India’s economy is larger than the UK’s – the fourth largest against the sixth – but the UK economy is more developed. The agreement is particularly relevant against the backdrop of the tariff war unleashed by US President Donald Trump. Trade deals have become more important after the World Trade Organisation (WTO) became dysfunctional. The deal may be the most comprehensive FTA entered into by India with a major country. India has signed important trade agreements with Australia and the UAE and is negotiating deals with the US, the EU, and other countries. These will help to raise India’s global trade profile. The India-UK deal took three years to finalise and Prime Minister Narendra Modi has described it as a “historic milestone”.</p>.India-UK FTA may dampen Indian ‘spirits’ in the short-term.<p class="bodytext">The bilateral trade between the two countries is valued at about $60 billion and is estimated to double by 2030. Indian companies’ access to British markets would be almost tariff-free, and Indian consumers would benefit from a gradual reduction in tariffs on imports from the UK. The deal will eliminate tariffs levied by the UK on about 99% of products, including those from sectors such as textiles, footwear, and manufacturing industries like electrical machinery. There will be major gains for India in the services sector and the UK will provide greater access to service providers in many sectors. Movement of professionals has been eased but the deal is short of India’s expectations in that respect. The UK government is not in a position to make many concessions on the matter. Skilled Indian workers in the UK and their employers will now be exempt from paying social security contributions for three years. India has lowered tariffs on whiskey and gin to 75% and further to 40% over 10 years. Automotive tariffs have been reduced. Duties have also been lowered for cosmetics, aerospace products, medical devices etc. The FTA is expected to deliver a 0.1% boost every year to the UK’s economy in the long term. The ratification of the deal will boost investments by both countries in each other’s economy.</p>.<p class="bodytext">The agreement has no provision to counter the UK’s proposed carbon tax, but New Delhi has preserved its right to retaliate or rebalance concessions if it impacts domestic exports. Negotiations are continuing on the bilateral investment treaty which was expected to be signed along with the FTA. There are some important disagreements, including on taxation, to be bridged before it is finalised.</p>
