Milestone for India, UK: Indian labour-intensive exports poised to gain; UK terms it the biggest deal since Brexit
India and the UK reached a free trade agreement (FTA) that aims to boost economic ties between the world's fifth- and sixth-largest economies, among the first such global accords in the Trump tariff era. The deal will make British Scotch whisky and cars cheaper in India, while reducing duties on Indian goods such as garments and leather products in the UK.Prime Ministers Narendra Modi and Keir Starmer announced the FTA and a Double Contribution Convention, a social security pact, following a phone conversation on Tuesday. The two sides originally aimed to ink the deal in October 2022. The UK said this was its biggest trade pact since leaving the European Union in 2020. India said that 99% of its exports to the UK will benefit from zero duty and that the FTA opens up significant export opportunities for labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, and gems and jewellery, as well as engineering goods, auto parts and engines, and organic chemicals.
Trade Forecast $120 B by '30 US President Donald Trump's tariff proposals are set to kick in early July, following a 90-day deferment. Notably, the US has said India will likely be one of the first countries with which Washington will sign a trade accord, talks on which are ongoing, giving it a head start.Meanwhile, business leaders on both sides welcomed the India-UK accord, saying it would lead to a surge in opportunities. Bilateral trade is projected to rise to $120 billion by 2030. As many as 14 rounds of negotiations took place between India and the UK over the FTA. Trade between India and the UK rose to $21.34 billion in FY25 from $20.36 billion in FY24. Sensitive items such as dairy products, apples and cheese have been excluded from any duty concession by India to protect its farmers, the Centre said.New Delhi has secured an exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions there for three years under the Double Contribution Convention. This will make Indian service providers more competitive in the UK, with savings pegged at around 20% of salaries. This is expected to benefit more than 60,000 IT sector employees alone. Benefits to Indian companies and employees are expected to exceed ₹4,000 crore."Delighted to speak with my friend, PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention," Modi posted on X. "These landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon." The FTA takes place in the backdrop of growing economic relations between India and the UK."Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has done since leaving the EU, and the most ambitious India has ever done," the UK said in a statement. "Prime Minister Modi also thanked the Prime Minister for his decisive leadership in getting the deal over the line."
Trade Forecast $120 B by '30 US President Donald Trump's tariff proposals are set to kick in early July, following a 90-day deferment. Notably, the US has said India will likely be one of the first countries with which Washington will sign a trade accord, talks on which are ongoing, giving it a head start.Meanwhile, business leaders on both sides welcomed the India-UK accord, saying it would lead to a surge in opportunities. Bilateral trade is projected to rise to $120 billion by 2030. As many as 14 rounds of negotiations took place between India and the UK over the FTA. Trade between India and the UK rose to $21.34 billion in FY25 from $20.36 billion in FY24. Sensitive items such as dairy products, apples and cheese have been excluded from any duty concession by India to protect its farmers, the Centre said.New Delhi has secured an exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions there for three years under the Double Contribution Convention. This will make Indian service providers more competitive in the UK, with savings pegged at around 20% of salaries. This is expected to benefit more than 60,000 IT sector employees alone. Benefits to Indian companies and employees are expected to exceed ₹4,000 crore."Delighted to speak with my friend, PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention," Modi posted on X. "These landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon." The FTA takes place in the backdrop of growing economic relations between India and the UK."Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has done since leaving the EU, and the most ambitious India has ever done," the UK said in a statement. "Prime Minister Modi also thanked the Prime Minister for his decisive leadership in getting the deal over the line."
economictimes
