India and the United Kingdom have concluded a historic free trade agreement (ALE), reduces prices on 90% of the goods and marking a significant recalibration of bilateral economic relations in the post-brexit and post-globalization era.
India and the United Kingdom concluded a free trade agreement on Tuesday, ending around three years of negotiations. The agreement, signed by the fifth and sixth larger economies in the world, is particularly important given the current global commercial climate affected by the prices imposed by US President Donald Trump in early April.
According to a SBI research report, the FTA is expected to improve the bilateral trade of 25.5 billion pounds sterling, contribute 4.8 billion pounds Sterling to the United Kingdom’s GDP and increase annual wages of the United Kingdom by 2.2 billion Sterling pounds. For India, the agreement provides expanded access to the British market in high-intensity sectors such as textiles, toys, marine products, car components and engineering products. It also opens up opportunities in key services such as IT, financial services, education and professional services.
Total India-UK goods trade reached $ 21.3 billion in 2010, India exports of $ 12.9 billion, while imports decreased from $ 6.1% to $ 8.4 billion, which led to a trade surplus of more than $ 4.5 billion.
A key element of the ALE is the facilitation of selective professional mobility – 1,800 to 2,000 annual visas for Indian chiefs, musicians and yoga professionals. However, disputed problems such as broader immigration policy and short -term work visas for Indian students have been excluded from the agreement.
The FTA also includes provisions for the facilitation of digital trade, green goods, reciprocal social security contributions for temporary workers and access to the United Kingdom to Indian government’s purchases as a class supplier. In addition, India has retained the right to revisit concessions if the carbon adjustment mechanism proposed by the United Kingdom (CBAM) Impact on Indian exports.
The agreement, which the two governments expect to officially sign in the coming months, underlines the evolving commercial strategy of India. Negotiations with the EU, Australia, Peru, Sri Lanka and Oman are also underway, in parallel with the exams of existing pacts with South Korea and Asean.
What changes with FTA
The Indian Ale – UK is considered not only as a transactional agreement, but as a strategic realignment which is moving away from over -dependence on Chinese supply chains and bypassing the increase in American protectionism – positioning the two nations as collaborative actors in a global multipolar economy.
According to a Reuters report, prices on whiskey and Gin should be considerably reduced as part of a new trade agreement. From 150%, these prices will be reduced by 75% before finally dropping to 40% in the space of ten years. This decision should greatly benefit the Scottish whiskey industry in Great Britain, as well as lower prices for consumers on the largest world whiskey market.
In addition, the trade agreement will probably result in an expansion of choices for Indian consumers, because a variety of goods will now be included. This expansion extends to clothing manufacturing companies and jewelers who will now have access to the British market, finally strengthening their beneficiary margins.
In addition, India is committed to reducing car rates to 10% with certain quotas in place, marking a significant decrease in the current rate rate of more than 100%. Various other British products such as cosmetics, aerospace products, lambs, medical devices, salmon, electric machines, carbonated drinks, chocolate and cookies will also benefit from lower prices under this trade agreement. In addition, Indian workers can see increased opportunities to work in certain sectors of the United Kingdom with the implementation of higher quotas.
The UK’s agreement with India ranks third, following its agreements with Australia and Japan. The United Kingdom has signed trade and agreements in principle with around 70 countries, as well as that of the EU.
