India-UK Free Trade Agreement (FTA)
India and the United Kingdom (UK) have concluded negotiations for a Free Trade Agreement (FTA) aimed at enhancing strategic and economic ties amid global uncertainties and trade tensions.
Key Provisions and Impact
- Tariff Reductions:
- UK will eliminate tariffs on about 99% of products, covering almost the entire trade value.
- India will reduce tariffs on whisky and gin from 150% to 75%, eventually to 40% over ten years.
- Automotive tariffs will drop from over 100% to 10% under a quota system.
- Tariff concessions on cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits.
- Export Competitiveness: Indian exports in textiles, toys, leather, marine products, footwear, and gems & jewellery are expected to gain competitiveness in the UK market.
- Social Security Pact: Indian professionals in the UK will receive a three-year exemption from social security payments, benefiting over 60,000 IT sector employees and saving 20% of their salaries.
Exclusions and Unresolved Issues
- Sensitive Items: India has excluded dairy products, apples, cheese, and other sensitive items from duty concessions to protect its farmers.
- Bilateral Investment Treaty (BIT): Remains unresolved due to differences in dispute resolution periods and taxation inclusion.
Significance and Future Outlook
- UK's Perspective: The FTA is the most economically significant deal post-Brexit.
- India's Perspective: It's the most comprehensive deal signed with a developed nation, setting a benchmark for equitable trade.
- Economic Projections: Bilateral trade, currently at $60 billion, is projected to double by 2030.
- Trade Figures (2024-25):
- Total trade: $21.33 billion.
- India's exports: $12.9 billion (13.3% Y-o-Y increase).
- UK's imports: $8.4 billion (6.1% Y-o-Y decrease).
