Numerous impressive adjectives have been used to characterize the UK-India trade deal and its impact on both economies. The Indian government hailed it as «the most comprehensive free trade deal» ever entered into, marking «an unprecedented achievement» for Indian migrant workers. On the other hand, the UK labeled it a «huge economic win.»
This trade deal stands out as the most significant one negotiated by Britain since Brexit. However, the specifics of the agreement are yet to be published, with leaders Sir Keir Starmer and Narendra Modi still to sign it. Parliamentary approval for such agreements can take up to a year.
Therefore, the details provided by the two governments are the only source of information available at this point.
Tariff Reduction on UK and Indian Goods
A key aspect of the deal is the reduction of tariffs. India, known for its protectionist stance, imposes tariffs of around 130% on certain imported goods. Consequently, Indians will make the most substantial tariff reductions, making UK-manufactured items more affordable and competitive in Indian markets.
Impact on Goods and Industries
Products like whisky and gin are set to benefit from reduced import taxes, with tariffs expected to decrease significantly over time. Additionally, there will be quotas on car exports between the UK and India, with tariffs on cars and parts dropping drastically.
Indian consumers can anticipate more affordable UK-manufactured products such as cosmetics, medical devices, aerospace items, lamb, salmon, electrical machinery, soft drinks, chocolate, and biscuits due to reduced tariffs. Similarly, the UK will lower import taxes on items like textiles, with many tariffs on Indian imports expected to be eliminated or gradually reduced.
India foresees expanded export opportunities in sectors like marine products, leather, footwear, sports goods, toys, gems and jewellery, engineering goods, auto parts, and organic chemicals as a result of this agreement.
Benefits for Indian Workers
A significant concession by the UK involves new benefits for Indian workers in the country. The agreement stipulates that both UK workers in India and Indian workers in the UK will only pay tax in their country of origin rather than the one they reside in. Additionally, Indian workers transferred to the UK, along with their employers, will be exempt from national insurance contributions for three years.
Political Perspectives
While the UK government asserts no alteration to its immigration policy, the Indian government highlights that the agreement facilitates mobility for professionals, including investors, intra-company transferees to the UK and their families, and independent professionals like yoga instructors, musicians, and chefs. The agreement is seen as opening up «immense opportunities» for talented and skilled Indian youth in the UK.
Additional Provisions
Exporting to India from the UK is expected to become more streamlined, with simplified customs processes. India has committed to releasing goods promptly at customs, collaborating with the UK on a unified trade portal, and publishing customs procedures and laws online in English. Moreover, new digital commitments will support electronic contracts and transactions, while enhanced copyright protections for creative industries aim to safeguard works for a minimum of 60 years. The deal also includes chapters addressing anti-corruption, consumer protections, labor rights, gender equality, and development.
Furthermore, UK companies now have the opportunity to bid for delivering public sector services and projects in India for the first time.