India-UK Free Trade Agreement: A New Era of Trade Growth
The India-UK Free Trade Agreement is set to bolster trade by expanding tariff concessions, aiming to boost merchandise and services sector exchanges. The tariff concessions are projected to enhance India's trade surplus and facilitate professional mobility, alongside offering reduced duties for exports and imports.
- Country:
- India
India's trade surplus with the UK has experienced a slight increase over the past decade, with expectations of further growth due to the recent Free Trade Agreement (FTA) between the two nations, as reported by rating agency ICRA.
Between 2014-15 and 2023-24, merchandise trade between India and the UK saw a compound annual growth rate (CAGR) of 1 percent. Imports have climbed with a CAGR of 6 percent, while exports have risen at a CAGR of 4 percent. India's trade surplus with the UK reached USD 4.5 billion in 2023-24 from USD 4.3 billion in 2014-15.
The FTA is set to revamp bilateral trade through tariff concessions on imports and exports. It is anticipated that 99 percent of Indian exports will be duty-free, enhancing opportunities in key sectors such as textiles, metals, and electronics. Furthermore, 90 percent of Indian imports will benefit from reduced or zero tariffs, offering cost advantages to consumers.
In the services domain, India is poised to gain from the UK's FTA commitments in sectors including IT/ITeS, financial, and educational services. The UK remains a significant contributor to India's FDI and other financial flows. The FTA aims to simplify professional mobility, with provisions for Indian workers' exemptions from social security payments for three years, potentially boosting remittances.
ICRA suggests that the FTA could benefit Indian corporates in the UK and UK entities in India, thanks to a robust presence in each other's markets.
(With inputs from agencies.)
Google News