India-UK FTA kicks in on Wednesday, bilateral trade to get booster shot
New Delhi, July 14
The India-UK Free Trade Agreement, which comes into force on Wednesday, represents a "gold standard" FTA due to its wide sectoral coverage that includes farmers, seafood exporters, and labour-intensive industries such as textiles, which will benefit from significant reductions in both tariff and non-tariff barriers, Commerce Secretary Rajesh Agrawal said on Wednesday.
"This is one of the first free trade agreements (FTAs) of its kind, which establishes a future-oriented economic architecture between two major economies of the world," Agrawal told journalists.
"This is also one of the most ambitious and aspirational FTAs of India, which we are operationalising as till date," he added.
Agrawal highlighted the agreement's inclusive nature, noting that Indian farmers would gain greater access to the premium UK agricultural market, while seafood exporters would benefit from complete duty-free access. He added that labour-intensive sectors such as textiles would also see gains, with duties of up to 12 per cent being eliminated under the agreement.
The Commerce Ministry said all domestic processes for the India-UK FTA implementation have been completed, with symbolic flag-off ceremonies to be held for consignments on July 15 from various locations across the country.
Under the deal, the UK will immediately eliminate tariffs on 96.8 per cent of its tariff lines, accounting for 97.7 per cent of the trade value. An additional 2 per cent of tariff lines, amounting to 1.8 per cent of trade value, will see reduced tariffs based on quotas.
India, on its part, will immediately eliminate tariffs on 30.3 per cent of the trade value, with 47 per cent more seeing tariffs eliminated in a phased manner. It will also provide reduced quota-based tariffs on 12.1 per cent of the trade value. In total, this would cover 89.5 per cent of tariff lines and 89.4 per cent of trade value.
Agrawal further stated that the agreement addresses non-tariff barriers as well, so that issues like Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) "do not become unjustified trade restrictions for our businesses in the future".
The Secretary also pointed out that the FTA protects India's sensitive sectors such as dairy, cereals, pulses, vegetables, gold and jewellery, smartphones, and critical polymers.
Agrawal said that the agreement was also a "game-changer" for India's services sector and skilled workforce because of the reciprocal Double Contributions Convention (DCC) which forms part of the pact.
"Indian employees and their employers contribute around 25 per cent of their salary to the U.K.'s national insurance system," he noted. "Their contribution is like a tax of 25 per cent as employees are unable to draw benefits. These are like sunk costs."
He pointed out that the DCC will ensure that workers do not end up paying double contributions towards their social security. That is, if they are paying social security in India, then they will not have to pay it in the UK for a period of five years. This is expected to benefit over 75,000 Indian workers and over 900 employers.
— IANS
Reader Comments
As an Indian professional working in London, the Double Contributions Convention is a game-changer! 🙌 I've been paying both Indian and UK social security for years - wasted so much money. This will save thousands of us 25% of our salary. Thank you to the negotiators who finally fixed this long-standing issue.
Happy about the FTA but concerned about small businesses. Big corporates will reap maximum benefits while our MSMEs might struggle to meet UK quality standards. Need more hand-holding and awareness programs for local manufacturers about SPS and TBT requirements. Otherwise this "gold standard" FTA will only benefit the big players.
Great move! 🇮🇳🤝🇬🇧 Finally moving beyond just talking about trade and actually signing deals. The 96.8% tariff elimination by UK is impressive. But I'm skeptical - similar promises were made in the past and implementation lagged. Let's see how this works on ground. Also, why only 30.3% tariff elimination from our side immediately? Hope our negotiators got good value.
The DCC is the real highlight here! As someone who has relatives working in UK, I know the pain of double social security contributions. This will put more money in workers' pockets and make UK a more attractive destination for Indian talent. But we also need similar agreements with other countries like US, Canada, Australia.
A balanced deal overall. We protected our sensitive sectors like dairy and gold - good move. But we need to watch the services sector commitments carefully. UK will push for more access in banking, insurance, legal services. Hope our regulators are prepared. Also
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