As India, UK Clinch Landmark Trade Deal, A Look At The Gains And Hurdles
New Delhi:
India and the United Kingdom have clinched a landmark free trade agreement. This marks UK’s most significant post-Brexit deal and India’s first outside of Asia and Australia. Trade talks between India and the UK have been on for several years, but gained momentum in the shadow of US President Donald Trump’s global tariffs order.
India, which currently is the world’s fifth-largest economy and UK, which is the sixth-largest, will gain considerably from this bilateral trade arrangement. Both nations aim to increase bilateral trade by a further $34 billion by 2040.
WHAT THE PRIME MINISTERS SAID
Lauding the pact, Prime Minister Narendra Modi said, “These landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies.”
UK’s Prime Minister Keir Starmer also praised the achievement, saying, “We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK’s economy.” He added that “Strengthening our alliances and reducing trade barriers with economies around the world is part of our plan for change to deliver a stronger and more secure economy here at home.”
WHICH SECTORS BENEFIT
Under the historic agreement, India and the UK will attain liberal market access and eased trade restrictions. The sectors that will benefit most under this new bilateral agreement are food processing, F&B, alcobev, and automobiles.
Tariffs on goods such as lamb, salmon, chocolates, biscuits, and whiskey will reduce sharply. The deal also secures quotas for both countries over imports of automobiles and parts. In a significant shift in its policy, New Delhi has given more market access to UK firms, especially in the automobile sector. This may suggest a shift in trend considering that India is also in talks with the United States and the European Union for similar trade deals.
THE HURDLES
Negotiations between New Delhi and London for a free trade agreement had started in January 2022. The talks faced several hurdles and extended periods where no progress was made. One of the reasons for this was the constant change in government in Britain, which saw four prime ministers take office in four years. India too saw elections last year.
Both countries are in talks with the United States to see if tariffs imposed by Donald Trump can be lowered. New Delhi and London also seek free trade pacts with the US, which is a major trading partner for both.
