U.K.–India deal set to boost bilateral trade by over $34 billion a year

British and India’s bilateral trade will receive more than $ 34 billion in the long run after free trade agreements, and the leaders of the countries call it a “historical” agreement.

FTA, who cut off the tasks on goods such as textiles, alcohol and automobiles, was signed on Thursday in the presence of Indian Prime Minister Narendra Modi and Keir Starmer in England.

Both sides marked the trade agreement in May with visas, tariff reduction and tax cuts in May after three years of intensive negotiations. Negotiations gained momentum, and both governments accelerated to sign the agreement as US President Donald Trump sent the world to turmoil.

The agreement between the world’s fifth and sixth largest economies is expected to increase bilateral trade. 25.5 billion pounds per year 2040.

The agreement offers “great benefits to both countries”, increases wages, increases living standards and reduces prices for consumers.

India’s modi praised the agreement “A plan for our shared prosperity,” To emphasize how Indian goods from textile, jewelry, agricultural products and engineering goods will benefit from better access to the UK market.

As part of the agreement, 92% of the goods exported by England to India While sees that tariffs are completely removed or reduced, 99% of Indian goods sent to the UK will be exempt from tariffs.

Dhiraj Nim, an economist on Anz Bank, said that the British trade is a “strategic gain” for the trade diplomacy of the new Delhi for bringing targeted benefits to Indian goods that have previously faced high tariffs or regulatory barriers.

The British government estimates that exports to India will decrease from 15% to 3% in weighted average tariffs. The agreement needs to be approved by the parliament of both countries, which are still a process that can take a few months.

In addition to reducing tariff rates in a wide range of products, the agreement is exempt from paying Indian temporary workers and employers in the UK for three years of paying social security contributions.

Tariffs in the UK Scotch and Gin will increase from 150% to 75% and fall Up to 40 % The next decade, Brendi and Rom tariffs will start to 110% at the beginning and reach 75%.

The automobile industry tariffs will see that under a quota system, it has dropped from 110% to 10% in five years.

Before the agreement, the British goods attracted an average of 14.6% in India, and according to the estimates of Citi Bank’s economist Samiran Chakraborty, the corresponding figure for Indian goods was 4.2%.

According to Chakraborty, one of India’s first trade agreements signed with an advanced economy, Britain, constitutes 3% of India’s total trade goods trade last year, the majority of machinery and equipment, followed by textile and shoes, he said.

He said that the agreement would support employment and industrial growth in India, as it provides support to Indian sectors such as textiles, jewels and jewels.

According to NIM, India’s surplus with England has expanded significantly in the last two years and it may grow in the near term as market access increases. Over time, facilitating the UK export barriers – especially in cars, alcoholic beverages and machines – can help narrow the gap.

Için It is hard to say exactly which direction the surplus will go, dedi Nim said, the general trade volume will be increased.

Analysts said the trade agreement could strengthen the position of both countries in negotiations with trade partners, including the USA.

Natixis Bank’s chief economist Alicia Garcia Herrero, the UK-India agreement, has a significant “leverage against the United States”.

London continues to remove the trade pact He agreed with the US in May and before a potential meeting between Starmer and Trump on Friday, during a personal trip by the US President to Scotland.

A agreement with India 4.8 billion pounds (6.5 billion dollars) every year, 2.85 trillion pounds In 2024.

For Modi, the trade agreement would probably serve as a jumpboard for India’s ongoing negotiations with other developed economies, and strengthen the difficulty of positioning his country as a suitable trade partner.

The agreement with the UK “to all Western forces … We are ready to trade with our conditions. And a large voice provided by this agreement,” BRICS Trade and Industry Vice President, CNBC’nin India on Friday in a statement.

New Delhi is competing to make an agreement with Washington before August 1, when 26% of the US is preparing to start.