India, UK sign historic Free Trade Agreement

India and the United Kingdom have signed a historic free trade deal, called the Comprehensive Economic and Trade Agreement (CETA). The deal was signed in London on Thursday, in the presence of India’s Prime Minister Narendra Modi, and UK’s Prime Minister Keir Starmer.

The free trade deal, which was in the works for three years, was announced in May. Now, it has been formalised in London as part of PM Modi’s UK visit.

Double Contributions Convention

In addition to the FTA, the two countries have also reached an agreement on the Double Contributions Convention. This will ensure that employees moving between the UK and India pay social security contributions in only one country at a time.

PM Modi on India-UK FTA

Speaking on the occasion, PM Modi said the agreements will boost the confidence of doing business in both India and the UK. Talking of the benefits of the two deals, PM Modi added that the UK’s economy will benefit from India’s skilled talent.

He also expressed cofidence that with these agreements, investment will rise in both countries, creating new employment opportunities.

PM Starmer on India-UK FTA

On the other hand, UK Prime Minister Keir Starmer called it the most significant trade deal signed by the country since exiting the European Union.

A statement from his office ahead of the signing of the deal 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.”

According to the British government, the FTA will boost bilateral trade between the two nations by around $34 billion annually.

CETA benefits for India

According to the Indian government, the FTA secures unprecedented duty-free access for 99% of India’s exports to the UK, covering nearly the entire trade basket. The deal is expected to open new opportunities for labour-intensive industries.

Sectors such as textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery are expected to get a big boost, alongside fast-growing sectors like engineering goods, auto components, and organic chemicals.

India also expects the agreement to boost its services segment significantly. This as the deal provides greater UK market access in IT and IT-enabled services, financial and legal services, professional and educational services, and digital trade.

Also UK will simplify visa procedures and liberalise entry categories for Indian professionals. So professionals deployed by companies to work in UK across all services sectors, and also those working on contracts such as architects, engineers, chefs, yoga instructors, and musicians, will benefit from the deal.

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CETA benefits for UK

According to the British government, under the FTA, India’s average tariff on UK products will drop from 15% to 3%. This will make it easier for British companies to sell products such as soft drinks, cosmetics, cars and medical devices to the Indian market.

The other key impact will be for UK’s Whisky producers, who will benefit from tariffs slashed in half. India will reduce tariff on Whisky immediately from 150% to 75% and then gradually to 40% over the next ten years.