6 days ago
India, UK sign trade deal; unveil Vision '35 for next decade of ties
India and the UK on Thursday inked a free trade agreement (FTA) that is expected to increase trade by £25.5 billion ($34 billion) in the long run and unveiled the India-UK Vision 2035 to reinvigorate their partnership over the next decade at a meeting between Prime Minister Narendra Modi and his British counterpart Keir Starmer. India, UK sign trade deal; unveil Vision '35 for next decade of ties
The UK was the first stop in a two-nation tour by Modi, which will also take him to the Maldives to be the guest of honour at the Indian Ocean archipelago's Independence Day celebrations on July 26. Modi said enhancing economic cooperation and strengthening efforts aimed at peace and stability in the Indian Ocean will be the focus of his tour.
Starmer hosted Modi at Chequers, the country residence of the British prime minister located 50 km northwest of London, to sign the trade deal, which promises to boost growth across both economies and unlock thousands of jobs, and the leaders unveiled their vision for a reinvigorated partnership over the next decade.
The India-UK Vision 2035, a renewed version of the bilateral comprehensive strategic partnership, is aimed at taking relations to new heights in a 'time of rapid global change', the British side said in a readout. The trade deal and the new vision document come against the backdrop of the churn caused by the trade policies of the Donald Trump administration in the US.
The trade deal, described as the UK's most economically significant bilateral trade deal since exiting the European Union (EU), will significantly improve market access for businesses in both countries, leading to cheaper products and services for consumers, the readout said.
The India-UK Vision 2035 will 'go beyond trade, with reinvigorated mutual commitment to drive prosperity and innovation, deepen defence cooperation through a new Defence Industrial roadmap, work together to secure our borders, tackle climate change and nurture educational connections', the readout said.
Under the reinvigorated partnership, India and the UK will strengthen cooperation in tackling corruption, serious fraud, organised crime, and irregular migration through enhanced intelligence-sharing and operational collaboration.
A year after India and the UK finalised the Technology Security Initiative (TSI), Modi and Starmer committed to 'strengthen national security by harnessing frontier technologies and shaping the technologies of tomorrow'.
The FTA is expected to increase two-way trade from the current level of almost $58 billion by $34 billion in the long run. India will get tariff elimination on 99% of its tariff lines under the deal, covering nearly 100% of trade value.
The UK will get reduced tariffs on 90% of British tariff lines, including the cutting of levies on whisky, automobiles, lamb and medical devices. Labour-intensive sectors such as Indian textiles and apparel will get a competitive advantage against countries such as Bangladesh and Vietnam.
Under the Double Contribution Convention, there will be an exemption for employers of Indian workers from paying social security contributions in the UK for three years, making it significantly easier to send workers on posting to Britain.
The finalisation of the FTA was announced by Modi and Starmer on May 6. Since then, the two sides have engaged in the legal scrubbing of the deal.
Starmer said: 'Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change.'
UK trade secretary Jonathan Reynolds, who signed the trade deal with his Indian counterpart Piyush Goyal, said almost £6 billion in new investments and export wins announced on Thursday shows the strength of the partnership with India.
Indian consumers are expected to benefit from improved access to British products ranging from soft drinks and cosmetics to cars and medical devices as average tariffs will drop from 15% to 3%. The UK currently imports £11 billion in goods from India and liberalised tariffs on Indian goods will make it easier and cheaper for British consumers and businesses to buy Indian products, the readout said.
Twenty-six British companies have announced new business in India. Airbus and Rolls-Royce will soon begin delivering Airbus aircraft, with more than half powered by Rolls-Royce engines, to Indian airlines as part of around £5 million worth of contracts.
