India Inc has expressed a warm welcome to the newly finalized Free Trade Agreement (FTA) between India and the United Kingdom, highlighting the numerous potential benefits for Indian businesses and the overall economy. The agreement, finalized after several years of negotiations, is expected to significantly boost bilateral trade, enhance investment flows, and create new opportunities for growth and job creation in both countries.
One of the most significant aspects of the FTA is the provision for duty-free access to the UK market for 99% of Indian exports. This will provide a major boost to Indian exporters, particularly those in labor-intensive sectors such as textiles, marine products, leather, footwear, sports goods, and gems and jewellery. Engineering goods, auto parts, engines, and organic chemicals are other important sectors that are expected to benefit from the FTA. The elimination of tariffs will make Indian products more competitive in the UK market, leading to increased export volumes and higher revenues for Indian companies.
In addition to providing greater access to the UK market, the FTA also includes provisions for the reduction of import duties on a range of products from the UK. India will slash tariffs on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade. This will benefit Indian consumers by making a variety of goods, including whisky, cars, cosmetics, and medical devices, more affordable. Specifically, tariffs on whisky and gin will be halved from 150% to 75% initially, and then reduced to 40% over the first ten years of the deal. Automotive tariffs will also see a significant reduction from over 100% to 10% under a quota system.
Industry leaders have lauded the FTA as a transformative accord that reflects a shared commitment to deepening economic ties, bolstering technology collaboration, diversifying global supply chains, and fostering a more business-friendly environment. The agreement is expected to steer bilateral trade towards an ambitious target of $100 billion by 2030. Moreover, the FTA is expected to give a fillip to sectors like FMCG, healthcare, and innovation-driven enterprises.
The FTA also addresses non-tariff barriers to ensure the free flow of goods and services between the two countries. This will help to reduce transaction costs and improve the ease of doing business for Indian companies operating in the UK market. Furthermore, the FTA includes a three-year exemption from social security payments for Indian professionals temporarily working in the UK, a move that will result in considerable cost savings for Indian service providers and strengthen their market position.
Overall, India Inc views the FTA as a significant positive step that will unlock new opportunities for growth and collaboration between India and the UK. The agreement is expected to boost exports, attract investment, create jobs, and drive innovation in both economies. As India continues on its path to becoming a global economic powerhouse, the FTA with the UK will play a crucial role in strengthening its position in the global marketplace.
