The recent conclusion of negotiations for the UK-India Free Trade Agreement (FTA) marks a pivotal moment in our bilateral relations, ushering in a new era of economic collaboration.
This comprehensive deal is set to significantly enhance trade and investment opportunities for businesses in both countries, fostering growth and innovation. When it comes into force, it is expected to increase bilateral trade, worth £43 billion in 2024, by £25.5 billion in the long run.
The agreement will be signed by both Prime Ministers later this year. Ahead of the signing, our governments are working together to finalise the legal text of the FTA.
Entry into force will take place as quickly as possible, once both the UK and India have completed their ratification processes, and I am confident the FTA will deliver growth across both countries and allow businesses, and citizens, to capitalise on the benefits of the agreement.
Key Benefits for UK Businesses
For UK exporters, the FTA brings substantial tariff reductions, notably:
lScotch Whisky and Spirits: Tariffs will be halved from 150% to 75% immediately, and further reduced to 40% over the next decade, making UK spirits more competitive in the Indian market.
lAutomotive Sector: Tariffs on UK-made cars will drop from over 100% to 10% under a quota system, opening new avenues for British automotive manufacturers.
lConsumer Goods: Products like cosmetics, medical devices, and food items will see significant tariff reductions, enhancing market access for UK businesses.
Additionally, UK firms will gain improved access to India’s vast procurement market, valued at approximately £38 billion annually, providing opportunities across various sectors.
Opportunities for Indian Enterprises
As per the Indian Government, Indian businesses stand to benefit immensely from the FTA:
lZero-Duty Access: 99% of Indian exports to the UK will enjoy duty-free access, benefiting sectors such as apparel, footwear, marine products, and engineering goods.
lEnhanced Competitiveness: The removal of tariffs will bolster the competitiveness of Indian products in the UK market, particularly for MSMEs in labour-intensive industries.
Smooth business travel between the UK and India is essential to ensure optimum benefits of the FTA. Whilst this agreement does not alter the existing points-based immigration system it does cover temporary business mobility, enabling UK and Indian businesses to make best use of temporary and highly skilled professional talent to support their operations.
For example, the agreement facilitates easier movement for Indian professionals including contractual service suppliers, intra-corporate transferees and provisions for yoga instructors, chefs, and artists.
Regional Impact: A Boost for Vizag’s Industries
Visakhapatnam, with its strategic location and industrial base, is poised to reap significant benefits:
lPharmaceuticals and Healthcare Manufacturing: Vizag, already a hub for pharma exports, stands to benefit from smoother regulatory alignment and lower tariffs. This will boost exports of generics and medical supplies to the UK.
lMarine Products: Vizag’s seafood industry will find new markets in the UK, leveraging reduced tariffs to enhance competitiveness.
lEngineering and Auto Components: Firms in these sectors can explore partnerships and supply chain integrations with UK counterparts, fostering innovation and growth.
Looking Ahead
The UK-India FTA is more than a trade agreement; it’s a strategic partnership aimed at mutual prosperity. As we implement this landmark deal, businesses in both nations should proactively explore the new opportunities it presents.
The British Deputy High Commission remains committed to supporting enterprises in navigating and maximizing the benefits of this agreement.
Together, we can build a resilient and dynamic economic future, strengthening the bonds between our nations and delivering tangible benefits to our people.
(The writer is the British Deputy High Commissioner at British Deputy High Commission, Hyderabad)
