New Delhi [India], May 17 (ANI): The bilateral trade between India and UK will increase by around 15 per cent annually until calendar year 2030 under the Free Trade Agreement (FTA) signed between the two countries recently, said CareEdge in a report.
The UK and India entered into a FTA on May 6, following approximately three years of negotiations.
Under the agreement, India will reduce tariffs on 90 per cent of British goods, with 85 per cent becoming completely duty-free over a period of ten years. In return, Britain has agreed to lower its tariffs on certain products, resulting in 99 per cent of India’s exports to the UK facing zero duties.
“Once the FTA is effective, the trade value between these two economies is expected to increase by around 15% annually until CY30, factoring in the aspect that the FTA will come into effect in a year,” the CareEdge reported.
Currently, India-UK trade accounts for approximately 2 per cent of India’s total trade, underscoring an underutilised partnership given the size and potential of both economies.
India-UK trade has shown consistent upward momentum, driven by a 10-12 per cent Compound annual growth rate (CAGR), it said.
The decline in 2020 and 2021 was primarily attributed to factors such as the global recession and supply chain disruptions, largely arising from the COVID-19 pandemic and Brexit, among others.
The report added that with the implementation of the FTA, considering a growth rate of about 15 per cent, India’s exports and imports to and from the UK are expected to reach approximately Great Britain Pound (GBP) 45 billion and GBP 30 billion, respectively, by 2030, factoring in the aspect that the FTA will come into effect in a year.
The report added that some of the benefits of FTA for Indian exporters would include improved market access, stable supply chains, increased competitiveness, higher volumes and new avenues for growth.
It added that the FTA is expected to boost India’s exports by significantly reducing tariffs, easing trade barriers leading to improved market access and make Indian products more price competitive, thereby increasing their demand in the UK.
Additionally, this has provided some relief to exporters who have been facing sluggish sales and uncertainty about potential reciprocal tariffs from the USA, the report added.
According to the agreement, 99 per cent of Indian tariff lines–representing nearly the entire trade value–will enjoy duty-free access to the UK market. Currently, most of the products face import duties ranging from 4 per cent to 18 per cent in the UK.
The agreement will boost key sectors and opens up bigger export opportunities for India, in sectors like textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts, and organic chemicals. (ANI)
