India-UK FTA: How both countries benefit
PM Modi and his British counterpart Starmer witnessed the historic trade pact; expected to boost trade, cut tariffs on goods like whisky, textiles and create jobs
The India-UK Free Trade Agreement (FTA) was signed on Thursday (July 24) during Prime Minister Narendra Modi’s visit to the UK. The Prime Minister met his counterpart, Keir Starmer.
The India-UK FTA trade deal was signed by the Union Commerce Minister and his British counterpart, Jonathan Reynolds.
The FTA is expected to bring significant benefits to both countries. For India, it would open up new scopes for growth, skill development and also boost employment opportunities in several sectors.
According to the UK Department for Business and Trade (DBT), once the trade pact comes into force, India's average tariff on British products will drop from 15 per cent to 3 per cent. It will mean British companies selling products to India, from soft drinks and cosmetics to cars and medical devices, will find it easier to sell to the Indian market.
Also Read: Goyal hails India-UK FTA as boost to MSMEs, farmers, global market access
Whisky producers will benefit from tariffs slashed in half, reduced immediately from 150 per cent to 75 per cent and then dropped even further to 40 per cent over the next 10 years, giving the UK an advantage over international competitors in reaching the Indian market, DBT said.
India will see an elimination of tariffs on around half its exports to the UK, including textiles, footwear and agricultural produce such as mangoes and grapes. DBT officials indicated that UK tariffs were typically already at the lower end, but these further reductions will make India a more competitive market in the region.
Also Read: Modi, Starmer meet in London; India, UK sign free trade agreement
How India benefits
1) With the trade deal with the UK signed, Indian industries and consumers will get easy access to medical devices and aerospace parts manufactured in and imported from the UK.
2) The trade deal will also make British products such as cosmetics, chocolates, biscuits, lamb, salmon and cars cheaper for Indian buyers as related tariffs will be slashed from 15 per cent to 3 per cent after it comes into effect.
3) Following the India-UK FTA, British companies will be easily able to export products such as whisky to India.
4) By providing access to Indian companies and freelancers to 36 service sectors in the UK, the FTA will make it much easier for Indians to live in the UK without any Economic Needs Test, reported NDTV.
5) The India-UK FTA will provide opportunities to Indian professionals to work in 35 sectors in the UK for years, even if they do not have an office in the country. According to the Union Commerce Ministry, the FTA will benefit over 60,000 IT professionals annually. Indian IT majors like TCS, Infosys, Tech Mahindra and Wipro are expected to benefit from it.
6) The FTA will also benefit professionals like chefs, yoga teachers and musicians by providing them access to the job market in UK
Also Read: UK PM Starmer hails ‘major win’ with landmark FTA during Modi's visit
How UK benefits
1) The trade deal will result in major cuts in Indian tariffs with reductions secured on 90 per cent of tariff lines. Within 10 years, 85 per cent of these will be exempt from tariffs.
2) UK companies will get wider access to the public procurement opportunities in India.
3) The India-UK FTA will also provide opportunities to British companies to bid on non-sensitive government tenders with a value above Rs 2 billion.
4) Over 2,200 jobs will be generated in the UK following the trade deal, which will also result in an annual wage hike of up to 2.2 billion pounds each year.
(With agency inputs)