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​Caution and optimism: On India’s FTA with the United Kingdom 

2 min read

India-UK Free Trade Agreement (FTA)

The Free Trade Agreement between India and the United Kingdom signifies a pivotal development in strengthening India's bilateral relations amidst a fragmented global trade landscape.

Key Benefits for India

  • Export Advantages:
    • 99% of India's exports to the U.K. will be duty-free.
    • Engineering exports are projected to nearly double to $7.55 billion by 2029-30.
    • Overall bilateral trade is expected to increase to $120 billion by 2030.
  • Employment and Investment:
    • Indian workers temporarily in the U.K. and their employers will be exempt from social security contributions for three years, easing hiring processes.
    • The FTA facilitates the movement of professionals and investors, potentially boosting foreign direct investment (FDI).

Concessions from India

  • India will reduce tariffs on 90% of imports from the U.K., with 85% moving to zero tariff within ten years.
  • Import duties on whiskey and gin will be lowered, increasing competition and affecting premiumisation trends.

Challenges and Criticisms

  • Historical FTA Issues:
    • Previous FTAs, like with the UAE and Australia, have not always been advantageous for India.
  • Concerns from Farmers:
    • Reduced tariffs on lamb, salmon, and other edible products have raised alarms among Indian farmer organizations.
    • Protection of low-income, low-margin Indian farmers is necessary.

Implications for Future Trade Agreements

  • The India-U.K. FTA is expected to serve as a template for future deals with the EU and the U.S.
  • India must exercise caution, given the larger trade significance of the EU and U.S.
  • Indian manufacturing, contributing less than 2% to global exports, requires supportive measures amidst international trade negotiations.
  • Tags :
  • India-UK Free Trade Agreement (FTA)
  • FTA Issues
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