The agreement, hailed as a significant economic milestone, will reshape trading dynamics between the UK and India.
UK and India Forge Historic Trade Agreement After Prolonged Negotiations
UK and India Forge Historic Trade Agreement After Prolonged Negotiations
A new trade pact promises reduced tariffs and expanded market access for both nations.
The UK and India have finalized a significant trade agreement after three years of negotiations, aimed at facilitating UK firms' access to the Indian market while reducing tariffs on Indian exports. British Prime Minister Sir Keir Starmer hailed the “landmark” deal, which does not alter immigration policies for Indian students in the UK, emphasizing its potential to bolster the economy and benefit British enterprises.
Last year's trade between the two nations reached £42.6 billion, with expectations to expand by an additional £25.5 billion annually by 2040 as a result of this deal. India's Prime Minister Narendra Modi characterized the agreement as an “historic milestone” and an impetus for enhanced trade, investment, growth, job creation, and innovation within both economies.
The UK government has indicated that once enacted, likely within a year, consumers can anticipate lower tariffs on a variety of goods imported from India, including clothing, footwear, and food products. On the flip side, UK exports like gin, whisky, and luxury cars are set to experience reduced tariffs, further amplifying trade benefits for British businesses. Tariffs on gin and whisky are expected to decrease from 150% to 75%, with projected future reductions planned, while high-value car tariffs will drop from 100% to 10% under specific quotas.
Jonathon Reynolds, the UK Business Secretary, expressed that the deal represents the most significant bilateral trade agreement the UK has established since exiting the European Union in 2020. Included in the agreement are provisions for the services sector and procurement, granting UK firms greater opportunities in India.
A unique aspect of the deal includes a three-year exemption from social security payments for some Indian and British workers. This initiative is designed to benefit employees of Indian firms temporarily located in the UK and vice versa, requiring contributions only in their home countries—a point praised by the Indian government as unprecedented.
However, opposition leaders have raised concerns regarding the deal. Kemi Badenoch criticized the agreement as a product of Labour's fiscal strategy, while others expressed worries over the tax implications for Indian workers coming to the UK. The government has reassured that this exemption will not compromise NHS funding as Indian workers will still pay the immigration health surcharge.
As India stands as the world’s fifth-largest economy and is projected to claim the third position soon, the trade agreement aligns with its ambitions to increase exports by $1 trillion by 2030. The deal also defends the philosophy of free trade amidst rising global protectionism and trade tensions, offering hope for UK businesses aiming to explore the vast Indian market. Commentators have deemed the agreement potentially “transformational,” given the rapid growth rates and existing high barriers in India's market.
Trade relations between the UK and India are set to redefine the economic landscape, with both nations looking to capitalize on newfound opportunities and navigate the complexities of international trade.
Last year's trade between the two nations reached £42.6 billion, with expectations to expand by an additional £25.5 billion annually by 2040 as a result of this deal. India's Prime Minister Narendra Modi characterized the agreement as an “historic milestone” and an impetus for enhanced trade, investment, growth, job creation, and innovation within both economies.
The UK government has indicated that once enacted, likely within a year, consumers can anticipate lower tariffs on a variety of goods imported from India, including clothing, footwear, and food products. On the flip side, UK exports like gin, whisky, and luxury cars are set to experience reduced tariffs, further amplifying trade benefits for British businesses. Tariffs on gin and whisky are expected to decrease from 150% to 75%, with projected future reductions planned, while high-value car tariffs will drop from 100% to 10% under specific quotas.
Jonathon Reynolds, the UK Business Secretary, expressed that the deal represents the most significant bilateral trade agreement the UK has established since exiting the European Union in 2020. Included in the agreement are provisions for the services sector and procurement, granting UK firms greater opportunities in India.
A unique aspect of the deal includes a three-year exemption from social security payments for some Indian and British workers. This initiative is designed to benefit employees of Indian firms temporarily located in the UK and vice versa, requiring contributions only in their home countries—a point praised by the Indian government as unprecedented.
However, opposition leaders have raised concerns regarding the deal. Kemi Badenoch criticized the agreement as a product of Labour's fiscal strategy, while others expressed worries over the tax implications for Indian workers coming to the UK. The government has reassured that this exemption will not compromise NHS funding as Indian workers will still pay the immigration health surcharge.
As India stands as the world’s fifth-largest economy and is projected to claim the third position soon, the trade agreement aligns with its ambitions to increase exports by $1 trillion by 2030. The deal also defends the philosophy of free trade amidst rising global protectionism and trade tensions, offering hope for UK businesses aiming to explore the vast Indian market. Commentators have deemed the agreement potentially “transformational,” given the rapid growth rates and existing high barriers in India's market.
Trade relations between the UK and India are set to redefine the economic landscape, with both nations looking to capitalize on newfound opportunities and navigate the complexities of international trade.
