Modi visits UK for 'win-win' free trade agreement

The National

4 days ago

A landmark free trade agreement between Britain and India will be signed on Thursday giving a long-term boost to both countries' economies amid the global hit of US tariffs.
At stake are significant prizes for both with the UK achieving its first major deal following Brexit and for the long-protectionist Indian government landing its first trading pact outside of Asia.
India's Prime Minister Narendra Modi, who is visiting the UK on a state trip, is set to sign a free trade agreement with British Prime Minister Keir Starmer.
Under the agreement, India will get duty-free access to British markets for its textile products and electric cars, while Britain will see a reduction of duty on its vehicles, food and whisky.
The deal, which needs to be approved by the UK Parliament and India's federal cabinet, likely next year, will see even greater bilateral trade which reached $55 billion last year, said officials.
Downing Street has heralded the agreement as a 'win' worth £6 billion to the economy that will also create a further 2,200 jobs, with Indian firms expanding their operations into Britain.
'Our landmark trade deal with India is a major win for Britain,' said Mr Starmer. 'It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country.'
The deal will drive jobs in high-growth sectors such aerospace, technology and advanced manufacturing, the UK government said, and lead to cheaper high street prices with greater choice on clothing, shoes, and food products.
India's average tariff on UK products will drop from 15 per cent to 3 per cent allowing British companies that sell products to India from soft drinks, cosmetics to cars and medical devices to expand into the subcontinent's market.
This could see British exports to India increase by 60 per cent 'in the long run', Downing Street said, with a projected addition £16 billion in exports by 2040.
India too claimed a win on the deal with the country gaining access to Britain's market for electric and hybrid vehicles in a quota system.
Furthermore, Indian commerce ministry officials said, 99 per cent of Indian exports would not have any duties.
British car exports will see their duties cut from 100 per cent to 10 per cent in a quota system as well as tariffs on whisky reducing to 75 per cent from 150 per cent.
There will be further tariff relief for the UK on aircraft parts, electronics and medical devices, it was reported.
Britain has invested $36 billion in India − making it the sixth biggest investor there. More than 1,000 Indian companies operate in the UK, employing 100,000 people and investing $20 billion, a figure now expected to grow.
Mr Modi has gained some credibility from the three-year negotiations after India held to its red lines by winning concessions on work visas and professional qualification recognition, reinforcing India's growing global services and skills position.
India also managed to keep its agricultural products out of the agreement, as the industry employs 40 per cent of the country. It is also an issue that has dogged trade talks with America.
The agreement can also demonstrate, perhaps worryingly to Washington, that US President Donald Trump's global tariff wars are pushing other countries to make bilateral deals, potentially at America's cost.