New FTA with UK Launches Today, Promising Boost for Exports
NEW DELHI: The long-awaited free trade agreement between India and the UK will be implemented on Wednesday. This agreement is expected to enhance the competitiveness of Indian exporters against those from Bangladesh and China. It will also provide greater access for Indian service providers and professionals in the UK market.
Commerce Secretary Rajesh Agrawal announced that the goal is to achieve $100 billion in trade within the next three to four years. The Comprehensive Economic and Trade Agreement will eliminate or reduce duties on 89.5% of the 12,000 products traded between the two nations. Key sectors such as textiles, food products, leather, footwear, engineering goods, and pharmaceuticals are anticipated to benefit significantly from the zero-tariff regime in the UK, which will apply to nearly all products except for 117.
Over 64% of products will enjoy immediate duty-free entry into India, while the remaining items will see phased duty eliminations. Additionally, 536 products, including cars, will experience duty cuts, although electric vehicles will not be included in the initial five-year commitment.
Exclusions and Opportunities
Darpan Jain, additional secretary in the commerce department, noted that sensitive sectors like dairy, cereals, and various farm products are excluded from the agreement. While India has offered duty concessions on silver imports from the UK, Agrawal emphasized that the rules of origin are stringent. Jain highlighted that Indian goods currently account for less than 2% of the UK’s $949 billion imports, indicating a substantial opportunity for growth.
The agreement also fully opens digital service delivery, benefiting global capability centers in India. These centers have attracted interest from international companies seeking skilled and cost-effective labor.
Visa and Social Security Benefits
The new trade agreement introduces a more predictable visa regime for business visitors and professionals. UK companies will benefit from the Double Contribution Convention, which exempts them from making social security contributions for up to five years for employees transferred from India. Currently, Indian employees and their employers contribute 23% of salaries to the UK’s National Insurance System. Jain stated that this change could lead to annual savings of $600 million, benefiting over 75,000 Indian workers and more than 900 employers.
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