PTI
New Delhi/London
India and the UK clinched a ‘landmark’ trade deal that will remove taxes on the export of labour-intensive products such as leather, footwear and clothing, while making imports of whisky and cars from Britain cheaper, in a bid to double trade between the two economies to $120 billion by 2030.
The world’s fifth and sixth-largest economies concluded the deal after three years of on-off negotiations.
The pact lowers tariffs on 99 per cent of Indian goods to zero in the UK market while allowing Indian workers to travel to the UK for work without changing Britain’s point-based immigration system.
Taxes on export of Indian clothing, frozen prawns, jewellery and gems will
be cut.
And so will be the import of whisky and gin from the UK after the treaty halved the tariff to 75 per cent initially and to 40 per cent by the 10th year.
Tariffs on automotive imports will go from over 100 per cent to 10 per cent under quotas on both sides, benefiting companies such as Tata-JLR.
Indian goods that will enter the UK at zero duty include minerals, chemicals, gems and jewellery, plastic, rubber, wood, paper, textile, clothing, glass, ceramic, base metals, mechanical and electrical machinery, arms/ammunition, transport/auto, furniture, sports goods, animal products, and processed food.
UK Prime Minister Keir Starmer described the pact as a “landmark” that will “make working people and businesses better off in both our countries”.
Calling the pact “a historic milestone”, Prime Minister Narendra Modi said the successful conclusion of an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention “will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth”.
The two have also concluded the negotiations for the Double Contribution Convention Agreement, or social security pact. It would help avoid double contribution to social security funds by Indian professionals working for a limited period in Britain.
“The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention will lead to significant financial gains for the Indian service providers,” the commerce ministry said.
It added that this pact will enhance competitiveness of domestic professionals in the UK market that would create new job opportunities as well as benefit a large number of Indians working in the UK.
However, the talks for the bilateral investment treaty (BIT) are still going on. Earlier, there were plans to conclude all three simultaneously.
According to the commerce ministry, the FTA with the UK is a modern, comprehensive and landmark agreement which seeks to achieve deep economic integration along with trade liberalisation and tariff concessions.
It said India will gain from tariff elimination on about 99 per cent of the tariff lines (or product categories) covering almost 100 per cent of the trade value offering huge opportunities for increase in the bilateral trade between the two nations.
“The FTA provides a positive impact on manufacturing across labour and technology-intensive sectors and opens up export opportunities for sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery and other important sectors such as engineering goods, auto parts and engines and organic chemicals,” it said.
This will substantially improve Indian goods competitiveness in the UK vis-a-vis other countries.
On the services front, India will benefit in sectors such as IT/ITeS, finance, professional, and educational services.
The FTA has eased mobility for professionals including contractual service suppliers; business visitors; investors; intra-corporate transferees; partners and dependent children of intra-corporate transferees with right to work; and independent professionals like yoga instructors, musicians and chefs.
