Prime Minister Narendra Modi's recent visit to the United Kingdom has culminated in the signing of a landmark Free Trade Agreement (FTA) between India and the UK. This deal, anticipated for three years, is expected to significantly boost economic ties between the two nations. Alongside the FTA, the two countries are also set to unveil a comprehensive "UK-India Vision 2035" to elevate their partnership.
The India-UK FTA is projected to increase bilateral trade by approximately $34 billion annually. The British government has hailed it as the UK's most economically significant bilateral trade deal since leaving the European Union. The agreement ensures the elimination of tariffs on roughly 99% of tariff lines, covering almost 100% of the trade value. It is expected to double bilateral trade from the current $60 billion to $120 billion by 2030.
Under the FTA, India will eliminate tariffs on 90% of UK products, while the UK will eliminate duties on 99% of Indian exports. This will benefit various sectors, including leather, textiles, electronics, and software, and is expected to attract new investments. Indian farmers are also expected to gain significantly, with duty-free access to British markets for agricultural and processed food products like turmeric, pepper, cardamom, mango pulp, pickles, and pulses. The Indian fisheries sector, especially in coastal states, will also benefit from duty-free access to the UK market for exports like shrimp, tuna, and fishmeal.
Conversely, the cost of British whisky and cars imported into India is expected to decrease. The FTA will also make it easier to export labor-intensive products such as leather, footwear, and clothing from India. UK-based companies are also set to gain, with estimates suggesting the FTA could boost the UK's GDP by £4.8 billion (Rs 56,150 crore) annually. British consumers may also see cheaper prices on Indian-made garments, footwear, and food products.
In addition to trade benefits, the FTA also aims to promote professional mobility. Indian yoga instructors, chefs, musicians, and service providers will be allowed short-term entry into the UK. Indian professionals working in the UK will be exempt from social security contributions for up to three years, potentially saving Rs 4,000 crore annually. Furthermore, UK firms can now bid on India's non-sensitive federal procurement tenders above Rs 2 billion, opening up access to contracts worth over Rs 4 lakh crore annually.
The "UK-India Vision 2035" agreement is designed to mark a "step-change" in bilateral ties for the next decade. This vision aims to create a modern, reinvigorated partnership that strengthens defense cooperation and drives innovation between the two economies. Foreign Secretary Vikram Misri has identified areas like "business, technology, research, education, innovation, and the knowledge economy" as emerging pillars of cooperation.
During his visit, Prime Minister Modi met with British Prime Minister Keir Starmer to review ties and discuss technology, investment, climate, defense, trade, and migration. He also met with Britain's monarch, King Charles III.
The signing of the India-UK FTA and the unveiling of Vision 2035 represent a significant step forward in the relationship between the two countries. The FTA is expected to boost trade, investment, and job creation in both nations, while Vision 2035 sets the stage for enhanced cooperation in various strategic sectors.
