Latest news with #freetradeagreement
Yahoo
8 hours ago
- Business
- Yahoo
India, UK to sign free trade deal during Modi's visit, cut tariffs on whisky, garments
By Manoj Kumar and Alistair Smout NEW DELHI/LONDON (Reuters) - India and Britain will sign a free trade agreement on Thursday during Prime Minister Narendra Modi's UK visit, officials said, with New Delhi to ease tariffs on British whisky, cars and some food items, and the UK offering duty-free access to Indian textiles and electric vehicles. The pact, concluded in May after three years of stop-start talks, should boost bilateral trade by removing numerous barriers and granting each country greater market access to the other. It will take effect after the British parliament and India's federal cabinet approve it, likely within a year. "This is a significant agreement," Vikram Misri, India's foreign secretary, told reporters on Tuesday, adding that legal vetting of the deal was near completion ahead of Modi's four-day trip to the UK and Maldives. Trade minister Piyush Goyal will accompany Modi for the formal signing, a commerce ministry official said. This will be Modi's fourth visit to the UK since he took office in 2014. He is scheduled to meet Prime Minister Keir Starmer to discuss trade, energy, security, health and education issues, and also hold talks with business leaders. Bilateral trade between the two countries reached $55 billion in 2023/24, while the UK has become India's sixth-largest investor, with cumulative investments of nearly $36 billion, Misri said. Around 1,000 Indian companies operate in the UK, employing 100,000 people, and they have invested about $20 billion there, he added. Under the trade agreement, tariffs on Scotch whisky will drop to 75% from 150% immediately, and then slide to 40% over the next decade, according to the British government, and on cars, India will cut duties to 10% from 100% under a quota system that will be gradually liberalised. In return, Indian manufacturers are expected to gain access to the UK market for electric and hybrid vehicles, also under a quota system, Indian commerce ministry officials said. The ministry has said 99% of Indian exports to Britain would benefit from zero duties under the deal, including textiles, while Britain will see reductions on 90% of its tariff lines. "The UK is an important market for Indian exporters," said Ajay Sahai, director general of the Federation of Indian Export Organisations, adding that the trade pact will boost bilateral trade and provide access for Indian sectors such as textiles, footwear, marine and engineering products. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
9 hours ago
- Business
- The Guardian
Indian prime minister makes UK state visit to sign landmark trade deal
India's prime minister, Narendra Modi, is visiting London to sign a landmark free trade agreement between his country and the UK, a pact viewed as a political and economic prize amid global trade tensions unleashed by the US president, Donald Trump. For Britain, eager to score a post-Brexit win, the deal is its most economically significant trade agreement since leaving the EU. For India, it marks its first major free trade pact outside Asia. For both, analysts say, the agreement signals a long-term economic partnership. 'The UK and India, in many ways we have complementarities. We have had a historical relationship. It's good to have a deeper trade relationship,' said Indian economist Sanjaya Baru. During Modi's two-day state visit starting on Wednesday, his fourth to the UK as prime minister, he will hold 'wide-ranging' talks with his counterpart, Keir Starmer, on trade, defence, technological cooperation and security, and will also pay a courtesy call on King Charles, according to an Indian government statement. India stood firm on key demands during negotiations, winning concessions on work visas, recognition of professional qualifications, and exemptions from national insurance contributions for Indian nationals working temporarily in the UK, all longstanding sticking points. Modi, accompanied by his commerce minister, Piyush Goyal, who led the negotiations, can claim India held its ground while the UK compromised, bolstering his message of India's rising global clout. However, the deal must still be ratified by both parliaments, likely delaying implementation until mid-2026. Under the agreement, 99% of Indian exports to the UK, spanning gems, textiles, engineering goods, leather, garments, and processed foods, will face zero tariffs. In return, the UK will see phased tariff cuts on 90% of its exports to India. Duties on scotch whisky will fall from 150% to 75% immediately and to 40% over 10 years. British cars, now facing tariffs of more than 100%, will see duties slide to 10% under a quota. Other gains include tariff relief on medical devices, pharmaceuticals, aircraft parts, and electronics. India's government hopes the agreement will inject new energy into its Make in India drive and revive foreign direct investment, which has slowed significantly. 'More than 5m export-related jobs in India can be linked to UK exports,' said Amrita Saha, a research fellow at the Institute of Development Studies at the University of Sussex. 'Overall, I believe this agreement is a positive step for India's labour-intensive sectors,' she told the Hindu newspaper. Crucially, India kept agriculture, an industry that employs more than 40% of its workforce, off the table. This red line for New Delhi has also stalled its trade talks with the US. Still, only the broad contours of the agreement, which marks a significant departure from India's traditionally protectionist trade stance, are public. 'We will have to look at the fine print the morning after,' Baru cautioned. Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion Some provisions, such as phased duty cuts on scotch and cars, could face backlash from domestic producers. Indian whisky makers have already voiced worries about 'unfair competition' from imports. Also, in a significant first, British firms will gain access to India's vast government procurement market, a potential breakthrough for sectors such as clean energy, transport, and infrastructure. Notably absent from the deal are financial and legal services, as talks on a bilateral investment treaty, which would offer investor protections, remain unresolved. Another sensitive issue, the UK's proposed carbon tax known as the carbon border adjustment mechanism (CBAM), was also left out. The policy, which would levy taxes on imports from countries with looser emissions rules, is seen by India as unfairly targeting developing economies. For now, the two sides appear to have kicked that issue down the road. However, 'the carbon tax remains the elephant in the room. It could wipe out the benefits of the free trade agreement for Indian exporters,' warned Ajay Srivastava, head of the Global Trade Research Initiative in New Delhi.
Reuters
12 hours ago
- Business
- Reuters
India-UK free trade deal: Who gains what?
NEW DELHI/LONDON, July 23 (Reuters) - Britain and India are set to formally sign a free trade agreement on Thursday during Prime Minister Narendra Modi's UK visit, following three years of negotiations. The deal then needs approvals from the British parliament and India's federal cabinet, likely within a year. Here are the key points of the agreement: India to reduce tariffs on nearly 90% of UK goods Whisky and gin levy to fall from 150% to 75%, then to 40% in a decade Automobile tariff to fall from 100%-plus to 10% under quota Tariffs to be cut on other goods including cosmetics, medical devices, salmon, chocolates, biscuits UK to offer duty-free access to 99% of Indian items, according to Indian commerce ministry, covering nearly 100% of trade value BENEFITS FOR INDIAN SECTORS Indian exports such as textiles, footwear, gems & jewellery, furniture, auto components, chemicals, machinery, sports goods and other items likely to have zero duties, down from current levels of 4%-16% in the UK. According to Indian commerce ministry, the UK will provide assured access for temporary stay to business visitors and contractual service providers as well as to yoga instructors, chefs and musicians. Indian workers working temporarily in the UK and their employers will be exempted from paying social security contributions in the UK for three years, with savings estimated at about 40 billion rupees ($463 million) annually. India will provide access to British suppliers for non-sensitive government procurement tenders in the federal government, with a threshold of 2 billion rupees. The deal will give UK businesses access to India's public procurement market, comprising about 40,000 tenders with a value of about 38 billion pounds a year, according to UK government estimates. The trade pact is expected to increase UK GDP by 4.8 billion pounds ($6.5 billion) annually in the long term, according to British government estimates, with consumers getting access to cheaper garments, footwear and food items from India. Indian textile and apparel manufacturers such as Welspun India, Arvind Ltd ( opens new tab, Raymond, Vardhman ( opens new tab likely to benefit from duty-free access for exports to the UK. Footwear manufacturers such as Bata India ( opens new tab, Relaxo ( opens new tab, auto manufacturers like Tata Motors ( opens new tab, Mahindra Electric and also Bharat Forge ( opens new tab could benefit, according to industry analysts. UK firms including whisky distiller Diageo (DGE.L), opens new tab, auto manufacturer Aston Martin and Tata-owned Jaguar Land Rover could benefit from access to fast-growing Indian market. ($1 = 86.3790 Indian rupees) ($1 = 0.7418 pounds)
Reuters
12 hours ago
- Business
- Reuters
India, UK to sign free trade deal during Modi's visit, cut tariffs on whisky, garments
NEW DELHI/LONDON, July 23 (Reuters) - India and Britain will sign a free trade agreement on Thursday during Prime Minister Narendra Modi's UK visit, officials said, with New Delhi to ease tariffs on British whisky, cars and some food items, and the UK offering duty-free access to Indian textiles and electric vehicles. The pact, concluded in May after three years of stop-start talks, should boost bilateral trade by removing numerous barriers and granting each country greater market access to the other. It will take effect after the British parliament and India's federal cabinet approve it, likely within a year. "This is a significant agreement," Vikram Misri, India's foreign secretary, told reporters on Tuesday, adding that legal vetting of the deal was near completion ahead of Modi's four-day trip to the UK and Maldives. Trade minister Piyush Goyal will accompany Modi for the formal signing, a commerce ministry official said. This will be Modi's fourth visit to the UK since he took office in 2014. He is scheduled to meet Prime Minister Keir Starmer to discuss trade, energy, security, health and education issues, and also hold talks with business leaders. Bilateral trade between the two countries reached $55 billion in 2023/24, while the UK has become India's sixth-largest investor, with cumulative investments of nearly $36 billion, Misri said. Around 1,000 Indian companies operate in the UK, employing 100,000 people, and they have invested about $20 billion there, he added. Under the trade agreement, tariffs on Scotch whisky will drop to 75% from 150% immediately, and then slide to 40% over the next decade, according to the British government, and on cars, India will cut duties to 10% from 100% under a quota system that will be gradually liberalised. In return, Indian manufacturers are expected to gain access to the UK market for electric and hybrid vehicles, also under a quota system, Indian commerce ministry officials said. The ministry has said 99% of Indian exports to Britain would benefit from zero duties under the deal, including textiles, while Britain will see reductions on 90% of its tariff lines. "The UK is an important market for Indian exporters," said Ajay Sahai, director general of the Federation of Indian Export Organisations, adding that the trade pact will boost bilateral trade and provide access for Indian sectors such as textiles, footwear, marine and engineering products.
South China Morning Post
a day ago
- Business
- South China Morning Post
How the India–UK trade deal could shape future pacts with the EU and US
India and Britain are poised to sign a long-awaited free trade agreement during Prime Minister Narendra Modi 's visit to London this week, a deal analysts see as a signal that New Delhi is willing to shed its traditionally protectionist stance and engage more deeply with Western partners amid rising global trade tensions. Advertisement The pact, which follows three years of negotiations, is expected to be finalised during Modi's bilateral meeting with British Prime Minister Keir Starmer , which begin on Wednesday. According to Indian officials, the two leaders will also review the India–UK Comprehensive Strategic Partnership and discuss matters related to security and technology. British estimates project the deal will boost bilateral trade by £25.5 billion (US$34.13 billion) annually by 2040. Trade between the two countries reached £42.6 billion last year, making India the UK's 11th-largest trading partner. 'I think this [India–UK FTA] is also about signalling from India that it is open to better integrating with the global economy – that it is ready to sign difficult trade agreements,' said Harsh Pant, a professor of international relations at King's College London. If approved by the British Parliament and India's federal cabinet, the agreement would take effect within a year, removing trade barriers and granting duty-free access to most goods. Britain's Business and Trade Secretary Jonathan Reynolds meets Indian Commerce Minister Piyush Goyal for trade talks in London on April 28. Photo: Reuters India has had a mixed track record with free trade agreements, with several deals over the past two decades leading to persistent trade deficits and, in some cases, domestic backlash from industries and states concerned about import surges.
