India-UK sign free trade deal: Here's what gets cheaper
What's the story
India and the United Kingdom have signed a historic Free Trade Agreement (FTA), which is expected to increase their annual bilateral trade by $34 billion. The agreement will see India reduce tariffs on 90% of UK products, while the UK will eliminate duties on 99% of Indian exports. The deal is expected to benefit sectors such as leather, textiles, electronics, and software while attracting new investments.
Agreement details
UK-made cars and Scotch whisky to get cheaper in India
Under the deal, India will cut 90% of its tariff lines, reducing its average levy on UK products from 15% to 3%. The country will also halve its tariff on Scotch whisky to 75%, with plans for further reduction to 40% over a decade. A quota-based tariff reduction on UK-made cars has also been agreed upon, bringing the headline level down from an exorbitant 110% to just 10%.
Export benefits
These Indian industries will benefit from the trade deal
The FTA will eliminate duties on 99% of Indian exports to the UK, including textiles, generic drugs and medical devices, leather goods as well as agricultural and chemical products. This is expected to give a major boost to India's leather sector which is likely to gain an additional 5% market share in the UK within two years.
Economic impact
Software services exports could see annual increase of around 20%
The FTA is expected to double electronics and engineering exports by 2030, with chemicals exports likely to grow 30%-40% in the next fiscal year. Gems and jewelry exports are also expected to double from the current $941 million over the next three years. Software services exports could see an annual increase of around 20% once the trade pact comes into effect. The trade pact also includes a procurement chapter allowing British companies to bid for federal-level contracts in India.