Sir Keir Starmer and India's Narendra Modi are poised to formalize a comprehensive trade agreement, a move expected to significantly boost the British economy. The deal, estimated to unlock £6 billion in investment for the UK, also includes strengthened collaboration to combat illegal migration and organized crime.
The UK-India trade deal is considered the largest of its kind in terms of its potential economic impact on Britain. Sir Keir Starmer has emphasized the deal's potential to increase the income of hardworking Britons and support families with the cost of living. He also expressed his determination to accelerate economic growth and raise living standards throughout the UK.
The agreement aims to reduce tariffs on a wide range of British goods from an average of 15% to 3%, with the goal of increasing the £11 billion of imports into India. The government has stated that whisky tariffs will be reduced by half immediately, with further reductions planned in the coming years. Other industries, including soft drinks, automobiles, and cosmetics, are also expected to benefit from lower duties.
The trade deal is projected to generate 2,200 jobs across the UK, spurred by £6 billion in investments from British and Indian businesses. Business Secretary Jonathan Reynolds has stated that this investment will reach all regions of the UK, ensuring that working people in every community benefit.
The agreement, officially termed a comprehensive economic and trade agreement, is scheduled to be signed in London. Piyush Goyal, India's Commerce and Industry Minister, and Jonathan Reynolds, the British Business and Trade Secretary, will be the signatories. Following the signing, the agreement will need to be approved by the British Parliament, a process that could take approximately a year.
This landmark agreement is the most significant bilateral trade deal for Britain since its departure from the European Union. The government anticipates that the deal will add £4.8 billion to the British economy and £2.2 billion in wages annually in the long term.
Once the agreement is implemented, 90% of tariffs on British exports to India will be reduced. This includes items such as whisky, cars, cosmetics, salmon, lamb, medical devices, electrical machinery, soft drinks, chocolate, and biscuits. India will receive a zero-tariff arrangement on 99% of its tariff lines, encompassing nearly 100% of trade value. This includes clothing, footwear, and food products like frozen prawns. The zero tariff on textiles and apparel will give Indian exports the same advantages as countries like Bangladesh and Vietnam.
India will lower duties on a limited number of car imports from 100% to 10%, while Britain will open its markets to electric and hybrid vehicles. Both countries have agreed to provide national treatment in select services, including telecom, construction, and environment.
The UK has bargained hard for the reduction of tariffs on Scotch whisky, which have been slashed from 150% to 75% while retaining the requirement for Scotch to mature for at least three years.
The FTA is expected to increase two-way trade from the current level of almost $58 billion by $34 billion in the long run. Under the deal, India will receive tariff elimination on 99% of its tariff lines, covering nearly 100% of trade value. The UK will benefit from reduced tariffs on 90% of British tariff lines, including cuts on whisky, automobiles, lamb, and medical devices. Labour-intensive sectors in India, such as textiles and apparel, will gain a competitive advantage.
