India-UK Free Trade Agreement: Cheaper Imports, Bigger Markets, and $120 Billion Target by 2030

A historical Free Trade Agreement (FTA) was signed between India and the UK (United Kingdom) in the presence of the prime ministers of both countries. This trade deal was signed on Thursday when PM Narendra Modi visited the United Kingdom, where he met his British counterpart, Keir Starmer. The agreement is aimed towards enhancing the bilateral trade to $120 billion by 2030 and around $34 billion annually. Towards doubling the current trade volume between the two countries. The agreement has helped reduce the tariff value in exports of labour-intensive goods such as leather, footwear, and clothing, at the same time reducing the import duties on British whisky and automobiles.

Prime Minister Narendra Modi says, “This agreement is not just an economic agreement but also the plan for a shared prosperity. On one side, Indian textiles, footwear, gems and jewellery, seafood, and engineering goods will get better market access in the UK. New opportunities will emerge in the UK market for India’s agricultural produce and processed food industry. This agreement will especially benefit Indian youth, farmers, fishermen, and the MSME sector. On the other hand, for the people of India and industry, products made in the UK, like medical devices, will be available at reasonable and affordable prices.”

The following things will become cheaper with the implementation of this trade deal:

Aerospace parts, medical devices: Industries situated in India will have more access to several products of the United Kingdom (UK) at relatively cheaper rates, including medical devices and aerospace parts.

Soft drinks, cars: This agreement will also provide Indian customers access to British products such as soft drinks, cosmetics, and cars. This is because the average tariff of India on UK products will decrease to 3 per cent from 5 per cent on the implementation of the agreement.

Duty on Scotch cut by half: With the effect of the FTA, it will be easier for British companies to export their product, whisky, to India with the tariff value reduced to half from 150% to 75%, and then it will be further reduced to 40% over the next ten years. This will provide the UK with an opportunity to compete with international competitors to reach the Indian market.

Nik Jhangiani, Interim Chief Executive of Diageo, said, “This agreement marks a great moment for both Scotch and Scotland, and we’ll be raising a glass of Johnnie Walker to all those who have worked so hard to get it secured.”

Chocolates, biscuits: India will also reduce the tariff on chocolates and biscuits imported from the UK, meaning they will be accessible for Indian customers at a relatively lower price.

This trade deal also makes it cheaper for Indians to live in the UK. In the UK, a total of 36 service sectors will be accessible to Indian firms and freelancers with no ‘Economic Needs Test.’

Even without having an office in the UK, Indian professionals can work in the UK’s 35 sectors for 24 months (two years). Under this trade agreement, Indian professionals will be exempted from UK social security payments for three years.