After more than three years and 14 rounds of negotiations, the United Kingdom and India have finally announced a free trade agreement (FTA). UK Prime Minister Keir Starmer will formally sign the deal on a visit to India later this year. This is the biggest and most economically significant bilateral trade deal the UK has struck since leaving the EU. It will have implications for both businesses and workers.

In 2024, the UK’s trade with India was worth £43 billion – £17.1 billion of exports and £25.5 billion of imports. Government modelling estimates that trade between the nations will increase by as much as 39 per cent and the UK’s GDP will expand by £4.8 billion or 0.1 percentage points per year as a result. India’s economy is growing fast. It is expected to expand by 6 per cent annually, becoming the world’s third largest economy by 2028 after the US and China. This certainly makes the deal with the UK very timely. With a population of more than 1.4 billion and a growing middle class, the country offers huge market potential. Its import demand is predicted to grow by 144 per cent between 2021 and 2035. This combination of strong economic growth and increasing numbers of citizens with disposable cash makes a compelling case for the deal.

Advertisement

Both the UK and India have agreed to reduce tariffs under the deal. India will immediately lower its 150 per cent tariffs on Scotch whisky and gin to 75 per cent, and then to 40 per cent within ten years. Tariffs on foodstuffs such as lamb,........

© The Statesman