Under the microscope: India and the UK seal 'remarkable' accord
In a historical move, India's Prime Minister Narendra Modi hailed the UK-India Free Trade Agreement as "a game-changer" that will "further intensify" the strategic partnership between the two nations. After 14 rounds of negotiations, this groundbreaking agreement has finally been inked.
As anticipated, benefits to India's industry were already evident, with more than 60% of total Indian merchandise being duty-free into the UK, while the rest attracted low tariffs. Labour-intensive sectors such as textiles, footwear, gems, and jewellery will undoubtedly benefit from lower tariffs, giving them a competitive edge in the UK market.
The agreement includes provisions for new business migration visas, allowing 100 Indian workers entry into the UK annually. Although this is significantly less than India's initial proposals for increased quotas in sectors like IT and healthcare, it still represents a step forward in fostering collaboration between the two nations.
The deal also promises increased access for Indian professionals in the UK market, enhancing business opportunities and strengthening ties between the two countries. However, the visa concessions provided are limited, focusing primarily on specific business visas. Unfortunately, there are no significant improvements in visa access reported for students, with benefits primarily aimed at professionals and skilled workers.
'Rules of origin,' a crucial provision in FTAs, was another contentious issue. While the details are yet to be deciphered, we can assume that third-country goods will not be allowed to be dumped in the Indian market by simply labeling them.
The UK-India FTA is the most comprehensive of the limited agreements that India has signed, including those with Mauritius, the UAE, and Australia. India is actively negotiating a bilateral trade agreement with America, its largest trading partner, with the UK wanting the ability of its companies to go straight to international courts for dispute resolution.
Though the tariff on Scotch whisky has been reduced from 150% to 75%, it remains unclear whether the UK government has agreed to make changes in the minimum three-year maturity period required to be classified as 'Scotch'. Indian whisky manufacturers have long been lobbying for a reduction to 12-18 months, arguing that beyond that, losses due to evaporation could make their products unviable.
The Indian government has been particularly sensitive about data being taken out of the country, imposing strict regulations on US tech giants to keep their servers within India. This protective stance towards data continues to influence the negotiations.
As India seeks to double its trade with the UK over the next 10 years, it is imperative to monitor the evolution of this historic agreement to better understand its potential impact on both economies and the strategic partnership between the two nations.
- The UK-India Free Trade Agreement, with its provisions for lower tariffs, will enable India's labor-intensive sectors like textiles, footwear, gems, and jewellery to gain a competitive edge in the UK market.
- The agreement also includes new business migration visas, allowing 100 Indian workers entry into the UK annually, a step forward in fostering collaboration between the two nations.
- Despite the reduced tariff on Scotch whisky from 150% to 75%, the UK government has yet to agree on making changes in the minimum three-year maturity period required to be classified as 'Scotch', a request long-standing by Indian whisky manufacturers.
