FTA With UK Sealed: A Quick Guide To The Trade Pact, And How India Stands To Benefit
The pact, seen as a win-win arrangement for both the economies, will significantly reduce import duties on a wide array of products.
After more than three years of negotiations, India and the United Kingdom have succeeded in hammering out a free trade agreement. The FTA is aimed at doubling the bilateral trade between the two countries by 2030 from $60 billion at present.
The pact, seen as a win-win arrangement for both the economies, will significantly reduce import duties on a wide array of products, thereby offering more opportunities for increased exports from both sides.
The FTA, along with Double Contribution Convention pact, will catalyse trade, investment, growth, job creation, and innovation in both the economies, Prime Minister Narendra Modi said.
Following are the 10 key highlights of the India-UK FTA and the Double Contribution Convention.
99% Indian exports to benefit from zero duty in UK market
Indian import duty will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150% to 75% before reducing to 40 pc by ten years of the deal.
Automotive tariffs will go from over 100% to 10% under a quota.
Other goods with reduced import duties, 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.
British shoppers could see cheaper prices on products including clothes, footwear, and food products including frozen prawns as UK liberalises tariffs.
The deal is expected to increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run.
Barriers to trading will be dropped, with India agreeing to reduce tariffs on a whole host of products including whisky, medical devices, advanced machinery, and lamb, making UK exports more competitive
Opens up export opportunities for labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals
Significant boost to trade in services, such as IT/ITeS, financial services, professional services, other business services and educational services.
How India Stands To Benefit
Huge win with three-year exemption from social security payments for Indian employees working in the UK.
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.
India will benefit from FTA commitment from the UK in services such as IT/ITeS, financial, professional, and educational services.
FTA eases 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; and Independent Professionals like yoga instructors, musicians and chefs.
India secures significant commitments on digitally delivered services such as architecture, engineering, computer related and telecommunication services .
The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK.
India ensures that non-tariff barriers are suitably addressed to ensure free flow of goods and services and that they do not create unjustified restrictions to its exports.
With PTI inputs
