British businesses must capitalise on milestone UK-India trade deal
British businesses must grab the opportunity from the UK-India trade deal to access one of the world’s fastest growing economies, write Amarjit Singh and Sangeeta Khorana
Last week’s meeting between business secretary Jonathan Reynolds and Indian commerce minister Piyush Goyal produced consensus on the much-awaited trade UK–India Free Trade Agreement (FTA).
The deal marks a significant milestone in the deepening of economic and strategic ties between the UK and India and has been termed the “biggest and most economically significant” bilateral trade agreement the UK had signed since leaving the EU in 2020.
The trade deal, which will lock in preferential access for partner economies, is likely to boost bilateral trade by £25.5bn, raise UK GDP by £4.8bn and add £2.2bn to wages by 2040.
It will give British businesses opportunities to access one of the world’s fastest growing economy, with a growing middle class and population of over 1.4bn.
Why the UK-India deal matters
The momentous deal will pave the way for greater trade flows, higher investment and boost business partnerships.
While full details of the agreement are awaited, the deal will allow 99 per cent of Indian goods to access the UK market. In return, India will cut tariffs on 90 per cent of tariff lines, with 85 per cent tariff lines agreed to be duty-free within the next 10 years.
India’s tariffs on UK whisky and gin will fall from 150 per cent to 75 per cent, which will go down to 40 per cent by year ten. Automotive tariffs will also decline from over 100 per cent to 10 per cent under a quota system.
India will lower tariffs on cosmetics, advanced manufacturing, medical devices, lamb, salmon, and electrical machinery, as well as on soft drinks, chocolate and biscuits.
British consumers will benefit from reasonably priced clothes, footwear and food items as tariffs will be cut on these items.
The three-year waiver on social security contributions for Indian workers under the Double Contribution Convention has been hailed as a ‘significant step’ in the partnership.
While the deal involves no change to immigration policy, it will facilitate easier movement for skilled workers including contractual service suppliers, business visitors, investors, intra-corporate transferees, family members of transferees with work authorisation and independent professions (e.g. musicians, yoga instructors, chefs, among others).
The FTA between the fifth and sixth largest economies can be coined as a dividend of post-Brexit trade policy for the UK’s new Labour government and a diplomatic trophy for Indian Prime Minister Narendra Modi’s third term.
The road ahead
The deal will undergo legal text formalisation and approval. But it is the implementation of the trade deal that will decide whether the headline numbers materialise. In other words, it will be for entrepreneurs, investors and businesses in both nations to operationalise and benefit from the new bilateral framework.
In terms of next steps both countries will have to ensure customs officials manage complex rules-of-origin efficiently. For all businesses, from Scottish distillers to Indian IT giants, to benefit it is important that they can seize the market access opportunity this deal promises to deliver.
Sangeeta Khorana is a professor of international trade policy at Aston University and Amarjit Singh is the founder and CEO of the India Business Group, London