New Delhi: India and the UK Tuesday sealed a landmark free trade agreement that will lower tariffs on 99 per cent Indian exports and will make it easier for British firms to export whisky, cars and other products to India besides boosting overall trade basket.
Along with the FTA — the biggest the UK has done since leaving the European Union — the two sides also sealed a double contribution convention.
Prime Minister Narendra Modi described the two pacts as a “historic milestone” to catalyse trade, investment, growth and job creation in both the economies and further deepen the India-UK comprehensive strategic partnership.
The FTA, announced following a phone conversation between Modi and his British counterpart Keir Starmer, will benefit 99 per cent Indian exports from zero duty and ease mobility for professionals including business visitors and investors, officials said.
“In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention,” Modi said in a social media post.
“These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,” he said.
The trade deal, firmed up after three years of negotiations, will ensure comprehensive market access for Indian goods across all sectors and India will gain from tariff elimination on about 99 per cent of tariff lines (product categories) covering almost 100 per cent of the trade values, according to an Indian statement.
A British readout said Indian tariffs will be slashed, locking in reductions on 90 per cent of tariff lines, with 85 per cent of these becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150 per cent to 75 per cent before reducing to 40 per cent by 10th year of the deal, while automotive tariffs will go from over 100 per cent to 10 per cent under a quota, it said.
Other goods with reduced tariffs, which can open markets and make trade cheaper for businesses and Indian consumers, include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits, it said.
British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as UK liberalises tariffs, the readout added.
The deal is expected to increase bilateral trade by 25.5 billion Pounds, UK GDP by 4.8 billion pounds and wages by 2.2 billion pound each year in the long run, it said.
The Indian statement noted that the FTA ensures comprehensive market access for goods, across all sectors, covering all of India’s export interests.
“India will gain from tariff elimination on about 99 per cent of the tariff lines covering almost 100 per cent of the trade value offering huge opportunities for increase in the bilateral trade between India and the UK,” it said.
The FTA provides “positive impact” on India’s manufacturing across labour and technology intensive sectors and opens up export opportunities for sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines and organic chemicals, it said.
The FTA will make it easier for British firms to export whisky, cars and other products to India, officials said.
The trade deal will also ease mobility for professionals including contractual service suppliers, business visitors, investors, intra-corporate transferees, partners and dependent children of intra-corporate transferees with right to work, the Indian readout said.
It will facilitate mobility of independent professionals like yoga instructors, musicians and chefs.
“India has ensured that non-tariff barriers are suitably addressed to ensure free flow of goods and services and that they do not create unjustified restrictions to India’s exports,” the statement added.
“The FTA seeks to promote good regulatory practices and enhance transparency that are in sync with India’s own focus on domestic reforms to enhance the ease of doing business,” it said.
The conclusion of a “balanced, equitable and ambitious” FTA, covering trade in goods and services, is expected to significantly enhance bilateral trade, generate new avenues for employment, raise living standards, and improve the overall well-being of citizens in both countries, the PMO said.
“It will also unlock new potential for the two nations to jointly develop products and services for global markets,” it added.
“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,” the readout said.
Starmer said strengthening alliances and reducing trade barriers with economies around the world is part of the plan for change to deliver a stronger and more secure economy.
The British PM’s office said the deal will add billions to the UK economy, boost wages and deliver on this government’s plan for change.
“In a huge economic win for the UK, delivering for working people and British businesses, the Prime Minister underscored the need to go further and faster to get things done, to secure and renew our country,” it said.
“Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has done since leaving the EU, and the most ambitious India has ever done,” it said.
Modi also thanked Starmer for his decisive leadership in getting the deal over the line.
In the phone conversation, Modi said he was looking forward to welcoming Starmer to India soon.
PTI
