On Thursday, July 24, India and the UK signed a Free Trade Agreement in the presence of Indian PM Narendra Modi and British Prime Minister Keir Starmer. Not only this, but both Prime Ministers hold discussions on numerous topics. The FTA deal was a pivotal part of PM Modi’s visit to the UK. Both nations had agreed on the deal in the month of May. The deal was finalised to enhance the Bilateral trade upto $ 120 billion by 2030. However, discussions about the deal began in the month January 2022.
The Free Trade Agreement that was today would eventually provide a reduction of tariffs on exports of labour-intensive goods such as leather, Footwear and clothing, and decrease import duties on Whisky, Scotch and automobiles.
Benefits from FTA
Tariffs were abolished on 99% of India’s exports to the UK.
The agreement ensures that Tariffs would be abolished on 99% of Exports from India to Britain, including key sectors like leather, footwear, gems, and Jewellery etc. Exports from India would get duty-free access to the markets of Britain.
Duty on textile exports reduced from 12% to 0%
Removing Duties on Indian Garments and Home textiles, which range around 12%.It will offer competition to the products of Bangladesh and Vietnam. Notably, Indian Exports are projected to increase up to 40 per cent in the upcoming three years.
Agricultural products and processed foods are also duty-free
Several agricultural and processed foods, such as fruits, vegetables, cereals, spices and items including Mango pulp, pickles and Pulses will get duty-free access to the UK. Around 95% tariff lines are free, leading to an increase in Agri-exports by nearly 20% within three years. New Markets for Indian Agri commodities are opened due to FTA.
No Tariffs for Marine Products
No Tariifs for India’s marine products that holds around $5.4 billion marine export avenues for India. Our country has just a 2.25% share. Marine Items like Shrimp, Tuna, Fishmeal and feeds were earlier taxed between 4.2% and 8.5% but now tariffs have been removed from these items also.
Engineering exports to the UK have duty-free access
Even Engineering Exports to the UK will have duty-free access. Nonetheless, India Exports around $77 billion worth of engineering goods on a global basis, and Britain imports nearly $193 billion, but $4.28 billion is exported from India.
Due to the Duty Free access, Exports could double to around $7 billion by 2030
Zero Tariff on Pharma products
Medical products, including surgical instruments, diagnostic equipment, ECG machines, and X-ray systems, will now enjoy zero-duty access, making Indian products more cost-effective and lucrative in the UK market
Certainly, India exports nearly $1 billion medical products to the UK, even though the latter’s imports are nearly $30 billion. The FTA vanishes tariffs on generics, improving their competitiveness in Britain, which is India’s largest pharmaceutical market in Europe.
New edge for India’s young professionals
The FTA offers a new edge for India’s young professionals by exempting 75,000 Indian workers from UK social security payments for three years, granting access to 36 service sectors without an Economic Needs Test for Indian firms and freelancers. Significantly, professionals can now work in as many as 35 UK sectors for up to 2 years and the need for a local office. Moreover, over 1,800 chefs, yoga experts, and musicians will be permitted to work in the UK annually, opening new doors for cultural and professional exchange.