 "Scotch, cars, chocolates and more: What will become cheaper as India-UK sign FTA?")
India and the United Kingdom (UK) signed a Free Trade Agreement (FTA) on Thursday (July 24). British Prime Minister Keir Starmer is hosting his Indian counterpart, Narendra Modi, in London and the two are holding discussions on a range of topics.
The signing of the FTA is a key part of PM Modi’s UK visit. New Delhi and London concluded talks in May to reach a bilateral Free Trade Agreement, discussions for which first began in January 2022.
As per the British government estimates, the FTA will boost its GDP by £4.8 billion ($6.5 billion) annually. Indian exports to the UK are expected to double by 2030.
The trade deal will benefit both countries.
Here’s how it will impact you.
How India will gain
The India-UK FTA would eliminate duties on 99 per cent of Indian exports to Britain, including key sectors such as textiles, leather, gems and jewellery, auto parts and engines, furniture, sports goods, chemicals, and machinery.
Several of these goods are facing UK tariffs ranging from four per cent to 16 per cent.
The removal of UK taxes on Indian garments and home textiles – which range from eight to 12 per cent – will make them more competitive against products from Bangladesh and Vietnam. The Indian exports in this sector are projected to rise to up to 40 per cent in the next three years.
Zero tariffs on gold, diamond jewellery, and leather goods will be a boost for MSME exporters and luxury product manufacturers in India.
The UK will ease the process of approvals for Indian pharmaceutical companies, with the NHS opening further for generic medicines from India.
The European country will also cut duties on Indian processed foods, basmati rice, shrimp, spices, and tea, giving a fillip to exports from Kerala, Assam, Gujarat, and West Bengal.
Under the FTA, premium Indian food brands will have enhanced access to the UK market.
Tariffs will also be removed on agrochemicals, industrial chemicals, and plastics. India’s chemical exports to the UK could double by 2030.
Indian electric and hybrid vehicle makers are also set to benefit with preferential access to the UK under a quota system.
Welspun India, Arvind Ltd, Bata India, Relaxo, Tata Motors, Mahindra Electric, and Bharat Forge are among the companies likely to benefit from greater market access.
According to the Indian Commerce Ministry, the UK will provide assured access to business visitors, contractual service providers, yoga instructors, chefs and musicians for temporary stay.
The FTA will also make it easier for Indian professionals to work in the UK by streamlining employment laws and visa procedures. The British government will expand the range of occupations for which highly qualified Indians can apply.
Indian professionals working temporarily in the UK will not have to pay social security contributions for up to three years, saving around Rs 4,000 crore annually.
What gets cheaper for Indians?
Scotch whisky and luxury cars from the UK will become cheaper. India has agreed to reduce tariffs on Scotch whisky and gin from 150 per cent to 75 per cent, and further to 40 per cent over the next 10 years.
Taxes on imported UK-made cars, currently over 100 per cent, will drop to 10 per cent under a quota system that will gradually expand.
UK-based firms such as Diageo (Scotch whisky) and British luxury carmakers like Aston Martin and Jaguar Land Rover will greatly benefit from better access to India’s growing consumer market.
India will also eliminate or reduce tariffs on products such as cosmetics, salmon, chocolates, medical devices, and biscuits.
With inputs from agencies
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