India-UK FTA: Trade deal to cut tariffs on UK goods from 15% to 3%; make imports affordable for Indian consumers
India and the United Kingdom on Thursday finalised a historic Free Trade Agreement (FTA) that promises to significantly boost trade, jobs, and economic cooperation between the two nations. The trade agreement is set to reduce average tariffs on UK goods into India from 15% to 3%, making British goods like soft drinks, cosmetics, cars, and medical devices more affordable for Indian consumers, according to a UK statementOn the other hand, Indian exporters will benefit from near-total tariff elimination on about 99% of product lines, covering almost 100% of the trade value. Indian sectors such as textiles, footwear, auto parts, engineering goods, gems and jewellery, and agricultural products are expected to see a surge in demand in the UK market.
Trade deal to boost key Indian export sectors
The FTA is expected to open up premium UK markets to Indian agricultural products such as turmeric, cardamom, pepper, mango pulp, pickles, and pulses. These goods will now enjoy duty-free access, improving margins for Indian farmers and helping the country move closer to its goal of achieving $100 billion in agricultural exports by 2030.The Indian government has called the agreement a potential game changer for the agriculture and food processing industries, offering export-oriented farmers a significant advantage over competitors in Europe.The India-UK Free Trade Agreement aims to eliminate or reduce import-export tariffs between the two countries, making products more competitive in each other’s markets.The goal is to raise bilateral trade to $120 billion by 2030, according to news agency ANIThe FTA is expected to significantly benefit Indian sectors such as textiles, leather, footwear, sports goods, toys, marine products, gems and jewellery, engineering goods, auto components, and organic chemicals.
British jobs, whisky to get a boost
Calling it a “major win for Britain,” Prime Minister Keir Starmer said the trade deal will create thousands of new jobs across the UK and help bring down the cost of everyday goods such as clothes, shoes, and food products. The UK expects a £2.2 billion annual uplift in wages for British workers due to the FTA.“Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change,” Starmer said in the statement.Tariffs on British whisky, for instance, will be cut in stages from the current 150% to 75% immediately, and eventually down to 40% over the next decade. This gives UK distillers a big edge in one of the world’s largest whisky markets, the statement noted.
Long-term impact: Stronger ties, bigger trade
The United Kingdom currently imports £11 billion worth of Indian goods, and reduced tariffs will enhance accessibility and affordability of premium Indian products. “For businesses, this could mean potential savings when importing components and materials used in areas such as advanced manufacturing or luxury and consumer goods,” the statement noted.Projections indicate that decreased tariffs and regulatory barriers between both nations will boost UK exports to India by approximately 60% long-term, representing an additional £15.7 billion in exports by 2040.The bilateral trade is projected to grow by nearly 39% in the long term, reaching £25.5 billion annually when compared to 2040 projected figures without an agreement.The UK government highlighted India’s renewable energy transition, stating “The clean energy industry will have brand new, unprecedented access to India’s vast procurement market as the country makes the switch to renewable energy and continues to see growing energy demand.”Additionally, 26 UK firms have established new business ventures in India.Airbus and Rolls-Royce are set to deliver aircraft to major Indian carriers, with Rolls-Royce engines powering more than half the fleet, as part of recently secured contracts worth approximately £5 billion.On May 6, Prime Minister Narendra Modi and the UK prime minister announced the completion of the India-UK Free Trade Agreement (FTA). The commerce and industry minister Piyush Goyal on May 6 said 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% 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.”This agreement aligns with India’s vision of Viksit Bharat 2047 and supports both countries’ growth objectives.
