British Prime Minister Keir Starmer has said the “landmark” Free Trade Agreement (FTA) that he is set to sign with his Indian counterpart Narendra Modi is a “major win” for jobs and growth, as tariff cuts bring in cheaper prices on clothes, shoes and food products.
In a statement ahead of his much-anticipated bilateral talks with Modi at his country residence of Chequers on Thursday, July 24, Starmer also announced that nearly GBP 6 billion (USD 8.15) in new investment and export developments had been clinched as Indian firms expand their operations in the UK and British companies secure new business opportunities in India.
The leaders are also set to sign a renewed Comprehensive and Strategic Partnership, which will see closer collaboration on defence, education, climate, technology and innovation.
Thousands of jobs
“Our landmark trade deal with India is a major win for Britain,” said Starmer.
“It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change,” he added.
“We’re putting more money in the pockets of hardworking Brits and helping families with the cost of living, and we’re determined to go further and faster to grow the economy and raise living standards across the UK,” said Starmer.
Reduction in tariffs
According to the UK Department for Business and Trade (DBT), India’s average tariff on UK products will drop from 15 percent to 3 percent once the FTA comes into force. It will mean British companies selling products to India, from soft drinks and cosmetics to cars and medical devices, will find it easier to sell to the Indian market.
Whisky producers will benefit from tariffs slashed in half, reduced immediately from 150 percent to 75 percent and then dropped even further to 40 percent over the next 10 years – giving the UK an advantage over international competitors in reaching the Indian market, the DBT said.
“The billions brought to our economy from the trade deal signed today will reach all regions and nations of the UK so working people in every community can feel the benefits,” said UK Business and Trade Secretary Jonathan Reynolds.
“The almost GBP 6 billion in new investment and export wins announced today will deliver thousands of jobs and show the strength of our partnership with India as we ensure the UK is the best place in the world to invest and do business,” he said.
Potential savings for businesses
Official statistics show the UK already imports GBP 11 billion in goods from India, with liberalised tariffs set to make it easier and cheaper to acquire products. For businesses, this could mean potential savings when importing components and materials used in areas such as advanced manufacturing or luxury and consumer goods.
New analysis published along with the FTA claims in every region of the United Kingdom will benefit from an estimated GBP 4.8 billion (USD 6.52 billion) increase to UK GDP each year in the long term. Sectors in the spotlight include manufacturing, set to benefit from tariff cuts on aerospace (11 percent reduced to 0), automotives (110 percent down to 10 percent under a quota) and electrical machinery (down from 22 percent).
Tariff cuts combined with a reduction in regulatory barriers to bilateral trade are estimated to increase UK exports to India by nearly 60 percent in the long run – equivalent to an additional GBP 15.7 billion (USD 21.32) of UK exports to India when applied to projections of future trade in 2040, the DBT said.
The official figures forecast an increase in bilateral trade by nearly 39 percent in the long run, equivalent to GBP 25.5 billion (USD 34.64 billion) a year, when compared to 2040 projected levels of trade in the absence of an agreement.
The clean energy industry will have “brand new, unprecedented access” to India’s vast procurement market as the country makes the switch to renewable energy and continues to see growing energy demand.
“For financial and professional business services, locked in access will offer certainty to expand in India’s growing market and measures such as binding India’s foreign investment cap for the insurance sector, ensuring UK financial services companies are treated on an equal footing with domestic suppliers,” the DBT said.
Meanwhile, 26 British companies are said to have secured new business in India, with Airbus and Rolls-Royce set to soon begin delivering Airbus aircraft – with over half powered by Rolls-Royce engines.
During the talks, both nations will also agree to strengthen cooperation in tackling corruption, serious fraud, organised crime and irregular migration through enhanced intelligence sharing and operational collaboration.
