India-UK FTA Set to Drive 15% Annual Trade Growth by 2030

The recently signed Free Trade Agreement (FTA) between India and the UK is anticipated to increase bilateral trade by approximately 15% yearly until 2030, according to a CareEdge report. This agreement follows nearly three years of negotiations and was finalized on May 6.

Under the terms of the deal, India will cut tariffs on 90% of British goods, aiming for 85% to be completely duty-free over the next decade. In exchange, the UK has committed to reducing tariffs on specific Indian products, resulting in 99% of India's exports enjoying zero duties in the British market. The FTA is expected to take effect within a year, significantly boosting trade between the two nations.

Currently, trade between India and the UK comprises about 2% of India's total trade, indicating significant room for growth. India-UK trade has demonstrated consistent upward momentum, achieving a compound annual growth rate (CAGR) of 10-12%. The decline seen in 2020 and 2021 stemmed from global economic challenges like the COVID-19 pandemic and Brexit. Once the FTA is operational, India's exports and imports with the UK are forecasted to hit around GBP 45 billion and GBP 30 billion, respectively, by 2030.

The FTA offers numerous benefits for Indian exporters, including enhanced market access, stabilized supply chains, increased competitiveness, and expanded growth prospects. By slashing tariffs and simplifying trade barriers, the FTA is expected to make Indian products more competitive in the UK market, elevating demand.

Moreover, the arrangement brings relief to Indian exporters who have faced subdued sales and uncertainty over potential reciprocal tariffs from the USA. The agreement provides duty-free access on 99% of Indian tariff lines, significantly lowering the current import duties of 4% to 18% in the UK.

The FTA is set to bolster key sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems and jewellery, engineering goods, auto parts, and organic chemicals, unlocking new export opportunities for India.

(With inputs from agencies.)