India-UK 'BigDeal'
India and the UK have agreed on a free trade agreement after three years of negotiations. The announcement was made by Prime Minister Narendra Modi after a telephonic conversation with his British counterpart Keir Starmer. Trade between India and the UK stood at $55 billion last year. With the signing of the free trade agreement (FTA), the trade between the two countries will increase by $ 34 billion. Along with this, the Double Contribution Convention Agreement has also been signed in both countries. The agreement comes at a time when tensions between India and Pakistan are high. Fears of war between the two countries have increased after India destroyed nine terrorist bases in Pakistan in a missile attack carried out by India after the terrorist attack in Pahalgam. After the Pahalgam attack, India is getting diplomatic support from all over the world, on the other hand, India is also getting success on the business and economic front. The free trade agreement between India and Britain is being termed as a mega deal amid global instability due to US President Donald Trump's tariff war. After Brexit, the EU's major market was out of reach of Britain.
The condition of Britain's economy was very bad.Britain was constantly looking for new markets. On the economic front, India's economy was running fast on track, but India also needs new markets to reduce the impact of tariff war. Therefore, it can be said that this agreement is beneficial for both countries. The deal is expected to significantly reduce import duties on British products such as alcohol, cosmetics, chocolates, soft drinks, biscuits etc. On the other hand, favorable conditions will be created in the British market for India's textiles, footwear and food products. However, Britain has not agreed to change its immigration policy. However, it has agreed to simplify the visa process for Indian professionals. Under this, it will give 1,800 visas every year for cooks, musicians and yoga instructors from India.
The agreement is on three separate issues. The first is the FTA, the second is the Bilateral Investment Treaty and the third is the Social Security Agreement, which is called the Double Contribution Convention. The agreement will help avoid double contributions to social security funds by Indian professionals working in the UK for a limited period. Indian professionals contribute to their social security funds but are unable to avail of it as they return after completion of projects. Under this agreement, Britain will reduce tariffs on 90 percent of goods coming from India. Of this, 85 percent of the goods will not have any tariff in the next 10 years. Goods coming from Britain to India will also become cheaper. Under the agreement, India will not give any exemption in duty to UK industries on some goods. They include diamonds, silver, smart phones and optical fibres, etc. The deal is seen as a major achievement of British Prime Minister Starmer. However, its foundation was laid in 2022 by the then Prime Minister Boris Johnson. This will create employment opportunities in the UK. Europe and Britain are trying to strike trade deals with the rest of the countries amid the threat of a trade war due to US tariff announcements. There has been an encouraging response to the deal from the UK business community. However, the issue of carbon tax still remains. The Carbon Border Adjustment UK is set to implement from January next year.
It remains to be seen how the two countries will resolve the issue. If there is some problem in this, then it will happen that products coming from the UK will come at zero tariff, but products from India may have to pay carbon border adjustment tax. Despite this, Indo-UK business leaders are describing this agreement as a ray of hope amid Trump's tariff war and the specter of protectionism. India is also working with the US to finalise a bilateral trade deal to reduce the impact of tariffs imposed by Trump. India has changed its entire strategy. At present, India-UK has opened the doors of trade. The interests of the two countries are interlinked. It is better to move forward with honesty and transparency on the agreement.