How will the free trade agreement between India and the UK impact your pockets? What will change now?

India and UK sign historic FTA, slashing tariffs on 99% Indian exports and halving whisky/car duties. Eases visas for professionals, targets $120B trade by 2030. Deal sidelines China, pressures Bangladesh as UK pivots to India. Modi hails ‘win-win pact’, Starmer touts job growth.

New Delhi: A historic free trade agreement (FTA) has been signed between India and Britain, which is being considered a new chapter in the economic relations between the two countries. The agreement was signed by India's Commerce Minister Piyush Goyal and Britain's Trade Minister Jonathan Reynolds. The agreement was concluded in London in the presence of Prime Minister Narendra Modi and British Prime Minister Keir Starmer.

India with the upper hand

This agreement is Britain's biggest trade agreement after Brexit. Under this, an increase of about $34 billion in annual trade between the two countries is expected. This agreement will give India a big discount in the British market, and Britain will get new business opportunities in India.

The most important change is the reduction in tariffs. The tariff on 99% of exports from India to Britain will either be completely abolished or reduced significantly. This includes textiles, gems and jewelry, shoes, machinery, and auto parts. At the same time, India will reduce tariffs on about 90% of exports to Britain. Scotch whisky and gin, which earlier had a duty of 150%, will now be reduced to 75% first and then gradually to 40%. The tariff on British cars will also be reduced to just 10%.

Indian consumers to get British products at a cheaper price

With this agreement, Indian consumers will get British products at cheaper rates, like cold drinks, cosmetics, medical equipment, etc. A big change will also be seen in the services sector.

Indian IT, education, financial, and consulting services will get easy access to the British market. Visa rules will be easier for yoga instructors, chefs, and artists. Also, Indian professionals working in the UK will be exempted from social security payments for three years, saving them thousands of pounds annually.

Trade will be doubled

The aim of this FTA is to increase India-UK bilateral trade from $60 billion to $120 billion by 2030. This is likely to bring huge economic benefits to both countries.

Hapless China and Bangladesh

However, this agreement may increase the concerns of countries like Bangladesh and China. Bangladesh will no longer get duty-free facilities like India in the UK market, especially when it will be out of the LDC (least developed country) category in 2026. At the same time, this is a setback for China because Britain is now distancing itself from China and leaning towards partners like India.

Landmark Agreement

British Prime Minister Keir Starmer called this agreement historic and said that this will increase investment, trade, and job opportunities in Britain. Prime Minister Modi also expressed happiness, calling this agreement the result of years of hard work, and said that it will give new heights to India-UK relations.

Overall, this agreement has brought new opportunities for economic growth, employment, and strategic partnership for both countries.