Prime Minister Narendra Modi is expected to visit the United Kingdom on July 23-24, where the two countries may formally sign the landmark India-UK free trade agreement and explore strengthening bilateral security cooperation.
Earlier on May 6, UK and India entered into a Free Trade Agreement (FTA), following approximately three years of negotiations.
Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a period of ten years. In return, Britain has agreed to lower its tariffs on certain products, resulting in 99 per cent of India’s exports to the UK facing zero duties.
Currently, India-UK trade accounts for approximately 2 per cent of India’s total trade, underscoring an underutilised partnership given the size and potential of both economies.
According to the agreement, 99 per cent of Indian tariff lines–representing nearly the entire trade value–will enjoy duty-free access to the UK market. Currently, most of the products face import duties ranging from 4 per cent to 18 per cent in the UK.
India-UK trade has shown consistent upward momentum, driven by a 10-12 per cent Compound annual growth rate (CAGR), as per a report.
As per a report by CareEdge, once the FTA is effective, the trade value between India and the UK will increase by around 15 per cent annually until calendar year 2030.
“Once the FTA is effective, the trade value between these two economies is expected to increase by around 15% annually until CY30, factoring in the aspect that the FTA will come into effect in a year,” the CareEdge reported.”Once the FTA is effective, the trade value between these two economies is expected to increase by around 15% annually until CY30, factoring in the aspect that the FTA will come into effect in a year,” the CareEdge reported.
The report added that with the implementation of the FTA, considering a growth rate of about 15 per cent, India’s exports and imports to and from the UK are expected to reach approximately Great Britain Pound (GBP) 45 billion and GBP 30 billion, respectively, by 2030, factoring in the aspect that the FTA will come into effect in a year.
