NEW DELHI: The free-trade agreement (FTA) between India and the UK is set to boost Indian exports, enhance worker mobility, and secure greater access to India’s middle-class market, S&P Global Market Intelligence said on Wednesday.
The FTA will also facilitate ongoing trade diversification efforts for India amidst evolving global trade dynamics, it said.
Expanded Indian merchandise and manufacturing exports with the UK will reinforce the existing upward trend in exports to the UK and should expand the market for key exports such as textiles and apparel facing access hurdles to the US, S&P Global said in a report.
The India-UK agreement aims to double the level of total trade between the two countries (in both goods and services) by 2030 from the US$56.7 billion reported in 2024.
The increased mobility of Indian workers in the UK and savings from the national insurance scheme waiver for information and communication technology workers for up to three years are likely to boost Indian remittances from abroad, supporting the country’s current account and domestic consumption, it said.
Indian workers based overseas remitted around US$130 billion in 2024, or 3.3% of GDP, with the UK being the third key source of remittances after the US and UAE.
Trade gains for the UK will slowly accrue from greater access to India’s fast-expanding middle-class segment, except in the beverage sector which will see an immediate halving of tariffs on 97% of its exports to India (whisky and gin).
The lowering of tariffs on UK’s automotive exports to India under a quota system lacks operational clarity, while the exclusion of pharmaceutical exports from the deal limits GDP gains for the UK.
India’s FTA with the UK forms part of expedited Indian efforts to secure trade agreements with a wider set of trade partners considered strategic to Indian interests, with ongoing global trade policy changes encouraging India to diversify its trade ties.
Source: The Financial Express
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