India and the UK have signed a historic Free Trade Agreement (FTA). This will provide tariff relief to 99% of Indian exporters and strengthen trade relations between the two countries.
India-UK FTA Deal: The long-awaited Free Trade Agreement (FTA) between India and the UK has finally been formally concluded. The agreement was signed in the presence of Prime Minister Narendra Modi and British Prime Minister Keir Starmer. This FTA is considered extremely important for both countries from an economic perspective and is expected to significantly boost bilateral trade.
What is an FTA and its Importance?
A Free Trade Agreement (FTA) is an agreement in which the taxes and tariffs levied on trade transactions between two countries are either eliminated or significantly reduced. Its purpose is to promote trade between the two countries, facilitate import-export activities, and increase profits for traders.
Expected Increase of $34 Billion
This new agreement is expected to increase annual bilateral trade between the two countries by approximately US$34 billion. In addition, this agreement will also help in doubling India-UK trade to $120 billion by 2030.
Wide-Ranging Benefits for Indian Exports
The biggest benefit of this FTA will accrue to Indian exporters. Under the agreement, 99% of Indian exports will be exempt from tariffs. This means that most products sent from India to the UK will now be cheaper, which will increase competition and boost demand for Indian products.
Which Sectors Will Benefit Directly?
This agreement will primarily benefit sectors considered to be India's strengths, such as:
- Leather and footwear
- Auto parts
- Seafood
- Toys
- Textiles and apparel
The reduction in tariffs on the export of these products will make Indian products cheaper and more competitive in the British market. This is expected to increase both production and employment in these sectors in India.
British Products Will Be Cheaper in India
The other aspect of the FTA is that many products imported from the UK will also become cheaper in the Indian market. These include:
- Whisky
- Chocolate
- Biscuits
- Salmon fish
- Cosmetic products
- Medical equipment
- Luxury cars
This will provide consumers with better choices and competitive prices.
British Prime Minister's Remarks
British PM Keir Starmer, describing the agreement as historic, said that it will make trade easier, reduce taxes, and put more money in the pockets of working people. He said that this is an agreement that will boost jobs, raise living standards, and take the economic partnership to new heights in both countries.
The business community in India has welcomed this agreement. The Federation of Indian Export Organizations (FIEO) has said that this step will greatly benefit the MSME sector in particular, which exports in traditional sectors.
