India-UK Trade Pact Set to Launch: Whisky, EVs, and Textiles Lead the Charge

Image Source: The Economic Times

India and the United Kingdom will sign a historic Free Trade Agreement (FTA) next week, a milestone in the economic bilateral relationship. The pact, signed after three years of negotiations, is set to transform trade patterns and open new opportunities in strategic sectors.

Key Points:

- FTA will grant duty-free access to the UK market for Indian manufacturing clusters and electric vehicles, boosting apparel exports as well as Indian manufacturing clusters.

- British whisky, cars, and foodstuffs will be subject to significant cuts in India's tariffs, with whisky duties lowered from 150 percent to 75 percent in a short-term step and then to 40 percent over a decade.
- The deal is projected to double trade between the two nations to 120 billion dollars by 2030, increasing investment, employment, and innovation.

Strategic Implications:

- India will reduce import duties on British automobile imports to 10 percent from 100 percent at present under quota. British manufacturers, in return, will gain greater access to India's growing consumer market.

- Fragile farm products such as milk, cheese, and apples have been left out of tariff reductions in order to safeguard local interests.
- A standalone social security arrangement will be exempting Indian professionals in the UK from contributions for three years, benefiting over 60,000 IT professionals.

Forward Looking:

- The deal will be inked during Prime Minister Narendra Modi's next visit to London and will be effective once the two governments ratify it, which is expected to happen within a year.

- Other trade agreements will gain a spillover effect with India's middle class and import demand expected to increase by 2035.

Sources: Economic Times, Business Standard, Reuters, IndiaTimes, Times of India