Historic India-UK Free Trade Agreement Signed

On Thursday, a landmark Free Trade Agreement (FTA) between India and the United Kingdom was signed during Prime Minister Narendra Modi’s visit to the UK. The agreement was formalized by India’s Commerce Minister Piyush Goyal and his British counterpart, Jonathan Reynolds. This significant trade deal, which had been under negotiation for three years, is expected to enhance bilateral trade by $34 billion annually.

Economic Opportunities for India

The FTA is poised to open new avenues for growth in India, particularly in sectors like information technology, financial services, and professional services. It will also support young entrepreneurs and Indian graduates seeking career opportunities in the UK. The agreement will allow Indian industries to access UK-made medical devices and aerospace parts at reduced costs. Additionally, British products such as soft drinks, cosmetics, chocolates, biscuits, lamb, salmon, and cars will become more affordable in India due to a reduction in tariffs from 15% to 3%. Electric vehicles will see a tariff cut from 110% to 10% within a quota.

Enhanced Access for Indian Professionals

The trade agreement facilitates easier access for Indian professionals to work in the UK across 36 service sectors without an ‘Economic Needs Test’. More than 60,000 IT professionals could benefit annually from this provision. Major Indian companies like TCS, Infosys, Tech Mahindra, HCL Technologies, and Wipro stand to gain significantly. Furthermore, Indian professionals will be exempt from UK social security payments for three years.

UK’s Gains from the Trade Deal

For the UK, the FTA promises substantial reductions in Indian tariffs across 90% of tariff lines. Over the next decade, 85% of these will be tariff-free. British businesses will gain expanded access to public procurement opportunities in India, with the potential to participate in tenders valued above Rs 2 billion. This could create over 2,200 jobs in the UK and lead to a wage increase of up to £2.2 billion annually. Additionally, British consumers will benefit from lower prices on clothes, shoes, and food products.