India-UK Free Trade Agreement

Prelims: Economic Development | Current events of national and international importance

Why in News?

India and United Kingdom have announced the successful conclusion of a mutually beneficial India – UK Free Trade Agreement (FTA) along with a Double Contribution Convention.

• Need - Indian textile exports face tariffs walls as high as 10% in the UK while British exports to India such as cars, Scotch whisky, and wines, face considerable tariffs of 100-150%.
• Highlights of India-UK FTAs – Export opportunities for labor-intensive sectors will increase.
• 99% Indian exports to benefit from zero duty in U.K. market.
• Indian import duty will be slashed, locking in reductions on 90% of tariff lines, 85% of these becoming fully tariff-free within a decade.
  • India’s tariff reduction – Whisky, medical devices, advanced machinery, and lamb.
  • Reduced import duties for Indian consumers – Cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
  • Products with cheaper prices for British shoppers – clothes, footwear, and food products including frozen prawns.
• Automotive tariffs will go from over 100% to 10% under a quota.
• Significance - It will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies.
• It will benefit Indian farmers, fishermen, workers, MSMEs, startups and innovators.
• It is aligned with India’s vision of Viksit Bharat 2047 and complements the growth aspirations of both the countries.
• It will serve as a template for an agreement with India’s 2^nd largest trade partner, the European Union (EU).

Double Contribution Convention

• It is the exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years.
• It will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market.
• It would create new job opportunities as well as benefit large number of Indians working in the UK.

References

1. PIB| Conclusion of India-UK Free Trade Agreement
2. The Hindu| Highlights of India- UK FTAs