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Times of Oman
18-05-2025
- Business
- Times of Oman
India-UK FTA to increase bilateral trade by 15% annually: Report
New Delhi: The bilateral trade between India and UK will increase by around 15 per cent annually until calendar year 2030 under the Free Trade Agreement (FTA) signed between the two countries recently, said CareEdge in a report. The UK and India entered into a FTA on May 6, following approximately three years of negotiations. Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a period of ten years. In return, Britain has agreed to lower its tariffs on certain products, resulting in 99 per cent of India's exports to the UK facing zero duties. "Once the FTA is effective, the trade value between these two economies is expected to increase by around 15% annually until CY30, factoring in the aspect that the FTA will come into effect in a year," the CareEdge reported. Currently, India-UK trade accounts for approximately 2 per cent of India's total trade, underscoring an underutilised partnership given the size and potential of both economies. India-UK trade has shown consistent upward momentum, driven by a 10-12 per cent Compound annual growth rate (CAGR), it said. The decline in 2020 and 2021 was primarily attributed to factors such as the global recession and supply chain disruptions, largely arising from the COVID-19 pandemic and Brexit, among others. The report added that with the implementation of the FTA, considering a growth rate of about 15 per cent, India's exports and imports to and from the UK are expected to reach approximately Great Britain Pound (GBP) 45 billion and GBP 30 billion, respectively, by 2030, factoring in the aspect that the FTA will come into effect in a year. The report added that some of the benefits of FTA for Indian exporters would include improved market access, stable supply chains, increased competitiveness, higher volumes and new avenues for growth. It added that the FTA is expected to boost India's exports by significantly reducing tariffs, easing trade barriers leading to improved market access and make Indian products more price competitive, thereby increasing their demand in the UK. Additionally, this has provided some relief to exporters who have been facing sluggish sales and uncertainty about potential reciprocal tariffs from the USA, the report added. According to the agreement, 99 per cent of Indian tariff lines--representing nearly the entire trade value--will enjoy duty-free access to the UK market. Currently, most of the products face import duties ranging from 4 per cent to 18 per cent in the UK. The agreement will boost key sectors and opens up bigger export opportunities for India, in sectors like textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts, and organic chemicals.
Times of Oman
10-05-2025
- Business
- Times of Oman
India–UK FTA poised to accelerate bilateral trade and investments
New Delhi: In May 2025, India and the United Kingdom concluded negotiations on a comprehensive Free Trade Agreement (FTA), marking a significant milestone in their bilateral relations. This agreement, finalized after three years of rigorous discussions and twelve rounds of formal negotiations, represents one of the most ambitious trade deals for both countries in recent years. It aims to eliminate tariffs on 99% of Indian exports to the UK and reduce tariffs on 90% of UK goods exported to India, with most becoming tariff-free within a decade. This FTA is not just a strategic economic pact but also a testament to the growing mutual trust and alignment of interests between the two countries. It reflects a shared commitment to deepening trade, strengthening economic cooperation, and fostering a dynamic and inclusive global trade environment. As two of the world's major democracies and service-oriented economies, India and the UK are setting the stage for a transformative era in bilateral relations. The agreement is expected to significantly enhance the ease of doing business, reduce regulatory hurdles, and provide a much-needed boost to industries that have been under pressure in the post-pandemic period. Structure of Tariffs Agreed Under the FTA The FTA outlines a structured and phased approach to tariff reduction and elimination. India has agreed to remove tariffs on 99% of its exports to the UK, providing substantial relief to sectors such as textiles, leather, gems and jewellery, and pharmaceuticals. In return, the UK will gradually reduce and eliminate tariffs on 90% of its goods exported to India over a ten-year horizon. Products such as automotive components, high-end alcohol, and processed food items will benefit from phased concessions. A significant highlight is the reduction in automotive tariffs from 100% to 10%, which is likely to have a positive ripple effect across industries dependent on vehicle imports and exports. Tariff concessions are complemented by provisions for improved market access, customs cooperation, and trade facilitation. India-UK Bilateral trade in recent years India-UK bilateral trade has shown consistent growth in recent years, reflecting deepening economic interdependence. According to the data from Ministry of Commerce and Industry, Government of India, the total trade volume between the two countries rose from USD 17.1 billion in 2021-22 to USD 21.3 billion in 2023-24. The trade has been largely balanced, with India maintaining a moderate trade surplus. Merchandise exports from India to the UK stood at around USD 12.9 billion in 2023-24, while imports from the UK were valued at approximately USD 8.4 with a trade surplus of USD 4.5 billion. The UK has consistently been one of India's top trading partners in Europe, and the new FTA is expected to take this trade relationship to unprecedented levels by removing long-standing tariff and non-tariff barriers. With the ease of doing trade between the India and UK, the bilateral trade is expected to more than double in the next 6-7 years. Structure of Trade Between India and UK The trade structure between India and the UK is both complementary and strategically important for each nation. India's principal exports to the UK include ready-made garments and textiles, gems and jewellery, engineering goods, petroleum and petrochemical products, transport equipment, spices, machinery and instruments, pharmaceuticals, and marine products. The FTA's elimination of tariffs on 99% of Indian goods will make these products more competitive in the UK market, benefiting Indian SMEs and large exporters alike. On the import side, India sources precious and semi-precious stones, high-end machinery, metal scraps, engineering goods, professional instruments, chemicals, and medical devices from the UK. British exports are expected to surge, especially in sectors such as alcohol, confectionery, processed foods, and specialty chemicals. The UK also exports cutting-edge technology and high-end manufacturing equipment, which are essential for India's rapidly modernizing industrial base. The FTA aims to streamline customs procedures and mutual recognition of standards, which will help reduce transaction costs and enhance predictability for traders. India and UK Investment Flows Investment relations between India and the UK have been robust, with each country playing a vital role in the other's economic development. In FY 2022-23, India received USD 1.74 billion in foreign direct investment (FDI) from the UK, a significant increase from USD 1 billion in FY 2021-22. Over the cumulative period from April 2000 to June 2023, UK investments in India have totalled approximately USD 34.29 billion, making the UK one of India's top investors. British firms have made substantial investments in sectors like banking, insurance, retail, infrastructure, and renewable energy in India. Conversely, India has emerged as one of the largest investors in the UK. Indian investments are largely concentrated in the fields of information technology, pharmaceuticals, automotive, and industrial manufacturing. In 2020-21, India was the second-largest investor in the UK in terms of the number of projects, according to the UK Department for International Trade. The FTA is expected to further boost bilateral investments by offering greater certainty, protection of intellectual property, and simplified business regulations. It also includes provisions for dispute resolution and investor protection, which are crucial for attracting long-term capital. Potential Benefits from India–UK FTA The India-UK FTA is poised to deliver a broad array of benefits across sectors and stakeholders: 1. Revival of labour-intensive sectors: The Indian textile and apparel industry, which currently faces UK tariffs of up to 10%, stands to gain immensely. With tariff elimination, Indian products will be more competitive in the British market, leading to higher exports and employment generation. 2. Export growth and trade diversification: The UK is keen on diversifying its trade relationships post-Brexit. The FTA offers British exporters preferential access to a large and growing Indian market. 3. Consumer benefits: Consumers in both countries will benefit from increased product variety, improved quality, and lower prices due to the enhanced competition and supply chain efficiencies enabled by the FTA. 4. SME empowerment: The agreement includes provisions for the promotion of small and medium-sized enterprises (SMEs) through digital trade, technical cooperation, and access to new technologies. This will foster innovation and entrepreneurship, particularly in high-growth sectors. 5. Strategic and geopolitical alignment: Beyond economics, the FTA strengthens the strategic partnership between India and the UK. It reinforces cooperation in areas such as digital technology, climate change, education, and mobility of professionals. 6. Job creation and skill development: The anticipated growth in trade and investment will spur job creation in both countries. Sectors like IT, manufacturing, logistics, and hospitality are expected to see new employment opportunities, accompanied by upskilling initiatives under bilateral cooperation programs. 7. Legal and institutional reforms: The FTA includes strong institutional mechanisms for monitoring and reviewing the agreement's implementation. It encourages transparency, good regulatory practices, and mutual legal recognition, which will reduce litigation and enhance business confidence. Conclusion The India-UK Free Trade Agreement marks a new chapter in the bilateral economic relationship between two dynamic economies. By significantly lowering tariffs, removing non-tariff barriers, and creating a transparent trade environment, the FTA will enhance the flow of goods, services, investments, and people. It is expected to unlock vast economic potential, boost GDP growth, and reinforce the strategic alignment of India and the UK in the global arena. As the world witnesses growing economic fragmentation and protectionism, this FTA stands out as a model for mutually beneficial cooperation rooted in shared values, economic pragmatism, and a forward-looking vision.
Times of Oman
09-05-2025
- Business
- Times of Oman
India UK FTA paves way for similar agreements with countries like USA, EU: Report
New Delhi: The recently concluded Free Trade Agreement (FTA) between India and the United Kingdom is expected to benefit both nations economically and could also pave the way for similar agreements with other countries such as the United States and the European Union, says a report by Bank of Baroda. The report noted that while the UK may not be among India's top trading partners at present, the FTA marks a significant step forward. It sets the stage for deeper trade relations with major global economies and is a strong signal of India's commitment to boosting international trade. It said, "While UK per se is not a very significant trading partner for India, this paves the way for similar agreements with other countries like USA and EU and hence, augurs well for India." India and the UK have announced the successful conclusion of this mutually beneficial FTA, calling it a modern, comprehensive, and forward-looking agreement. The report also stated that the deal is aligned with India's long-term vision of becoming a developed nation by 2047 under the 'Viksit Bharat' agenda. It also complements the growth aspirations of both countries. One of the key highlights of the agreement is the comprehensive market access it provides across various sectors. India will gain from the elimination of tariffs on about 99 per cent of the tariff lines, which covers nearly all of the trade value. This is expected to open up huge opportunities for Indian exports and significantly boost bilateral trade. From the UK's side, the government estimates that the deal will increase the country's GDP by £4.8 billion and raise wages by £2.2 billion annually in the long run. For India, the deal involves removing or reducing tariffs on 90 per cent of tariff lines, covering 92 per cent of goods imported from the UK based on 2022 data. This amounts to tariff cuts worth over £400 million, which could double to around £900 million in 10 years. One of the important sectors covered under the deal is automobile. UK car manufacturers will benefit from reduced tariffs, which will drop from over per cent to 10 per cent under a quota system. The report said initially, this will apply to internal combustion engine (ICE) vehicles and later extend to electric vehicles (EVs) and hybrids, aligning with the UK's evolving automotive industry. Similarly, Indian exporters will also get staged access to the UK market for EVs and hybrids under a quota system, supporting the UK's transition to electric mobility. Overall, the India-UK FTA is expected to increase trade flows, reduce trading costs, and strengthen economic ties between the two countries while opening up possibilities for future deals with other global partners.
Times of Oman
08-05-2025
- Business
- Times of Oman
India-UK FTA signals new global trade strategy, navigates US tariffs: SBI
New Delhi: India and the United Kingdom FTA is seen as a part of a new global trade strategy that aims to reduce dependence on China, manage trade challenges from US tariffs, and help the UK reshape its economy after Brexit, according to a report by SBI Research. The report also added that the multi-billion-pound deal will reduce tariffs on 90 per cent of traded goods, helping businesses on both sides. It said, "FTA signal a new global trade strategy, bypassing China's dependence, navigating US tariffs and reshaping post BREXIT Britain." The deal is also expected to increase bilateral trade between India and the UK by £25.5 billion in the long run. It will also raise the UK's GDP by £4.8 billion and push up wages by £2.2 billion every year. India is also expected to benefit in important ways, especially through stronger exports and job creation. India's trade share with the UK has already grown from 1.69 per cent in 2022-23 to 1.91 per cent in 2024-25. Total bilateral trade stands at around USD 60 billion and is projected to double by 2030. In FY25, India's exports have grown even as imports saw a decline of 6.1 per cent. The FTA covers goods, services, and technology, and focuses on inclusive growth, building strong supply chains, and creating jobs. The UK has opened up sectors such as information technology, finance, education, and consumer goods. This creates opportunities for Indian exports in labor-intensive industries like textiles, toys, marine products, and auto components. Though immigration rules remain mostly unchanged, the agreement allows limited professional movement. The report also highlighted that around 1,800 to 2,000 visas will be given each year to Indian professionals such as chefs, musicians, and yoga instructors. This shows how the FTA also supports cultural ties between the two countries. The prime ministers of India and the UK are expected to meet soon to officially sign the deal before it is approved by both parliaments.
The Independent
07-05-2025
- Business
- The Independent
The right's attack on the India trade deal is opportunistic, envious fakery
The India-UK trade agreement is a good deal that will promote growth by a small amount – every little helps – but it is being attacked by the Conservatives, Reform and the right-wing press in a welter of hypocritical opportunism. The deal's critics know perfectly well that it contains a sensible tax measure that will not increase the number of visas issued to Indians, but they have seized on the chance to put 'national insurance contributions' and 'cut' in the same sentence to pretend that this is favourable tax treatment for immigrants. It is no such thing. The deal includes a clause that will extend protection from being taxed twice for Indian workers temporarily posted to the UK and for British workers temporarily posted to India. These arrangements to prevent 'double taxation' are standard and already exist between Britain and many other countries. Indeed, one already exists between Britain and India, but it allows only one year of protection; that will now be increased to three years. It means that Indian workers on short-term contracts who are posted to the UK and who continue to pay social security contributions in India will be exempt from paying national insurance contributions here for up to three years. And vice versa. It does not mean that more Indian workers will come to Britain because the visa regime is unchanged. It does not mean that Indians will be treated more favourably than British workers because they will still be paying the equivalent of national insurance contributions at home. It is a good deal for the taxpayer because it will make the UK more attractive to highly paid Indians who will pay more tax here as a result. Kemi Badenoch knows all this, because she was trade secretary 10 months ago, leading the British negotiations on the deal. She says that she refused to agree to this tax change, which she would have done only on the grounds that it could look bad if it were misrepresented by political opponents. Nigel Farage may not be so well versed in the detail but he too knows that the deal is a reasonable one. He also sees an opportunity, and the incentive structure of current politics means that he cannot allow Badenoch to outflank him. As for Badenoch and Farage's cheerleaders in the press, they also know exactly what they are doing, but the temptations of headlines of 'tax cuts for immigrants' are too strong to resist. One of the reasons that Badenoch and Farage advocated leaving the European Union was so that Britain could negotiate its own free-trade deals with countries around the world. Yet when the Labour government succeeds in a complex negotiation that protects the British national interest, especially on the sensitive subject of visa numbers, they pretend it is something it is not. 'I think what frustrates them is we've done a deal that they couldn't deliver on,' Jonathan Reynolds, the trade secretary, said this morning. Reynolds can be faulted, possibly, for failing to prepare the ground with the British media; he appeared to have been taken by surprise by Narendra Modi, the Indian prime minister, suddenly announcing on Tuesday that the deal was done. The attacks on 'two-tier tax' were already all around the world on social media before the Labour Party's rebuttal machine had got its boots on. The bottom line is that this is a good deal and its critics ought to be ashamed of themselves. Are Badenoch and Farage now going to demand to scrap double taxation agreements with 50 other countries? Of course not. They ought to join principled free-trade Brexiteers such as Daniel Hannan, the Tory peer, in welcoming the deal. He said on Tuesday: 'A comprehensive deal in goods and services is a win-win. A pity to see so much misinformation about it tonight.' Then they should congratulate Keir Starmer and Jonathan Reynolds on securing a trade deal with the US, which according to the Financial Times might be announced this week, and then another with the EU, which will be unveiled at a summit at Lancaster House in two weeks' time.
