India and the UK on Wednesday activated a free trade agreement. This agreement, called the Comprehensive Economic and Trade Agreement, according to Prime Minister Narendra Modi, will pave the way for deepening economic ties and cooperation between New Delhi and London.
The activation of CETA between India and the UK was announced by outgoing Prime Minister Keir Starmer at the G7 summit in France.
According to Prime Minister Modi, the deal will bring new impetus to India’s farmers, entrepreneurs and small and medium-sized enterprises, deepen cooperation in technology, professional services and innovation, and support greater mobility of India’s skilled talent.
Trade agreement between India and the United Kingdom | Key takeaways
Through the trade agreement, the UK will gain wider access to the Indian economy, with gradual reductions in tariffs and quotas for sectors such as automobiles, and opening up areas in procurement, financial services, education, insurance and professional services.
Britain will also immediately remove tariffs on 96.8% of its tariff lines, covering 97.7% of trade value. Moreover, India will eliminate tariffs in one go on 64.1% of tariff lines and phase out tariffs on another 21%. Sensitive products will be excluded from this.
According to reports, marine exports, textiles, leather, footwear, gems and jewelery will not see any tariffs, which will help Indian suppliers compete more effectively in the British market.
Read also | “The India-UK FTA is the most important agreement economically.”
With the agreement now in force, both India and the UK are looking to at least double their trade to an estimated £48 billion by 2030 and boost their GDP by around £5 billion each year.
As per the details shared by the union ministry of commerce and industry, the CETA agreement between India and the UK will also create rural employment opportunities across India’s food processing units and packaging plants.
India and the United Kingdom sign the Social Security Agreement
Besides the trade agreement, India and the UK also signed a social security agreement. This agreement, called the Dual Contribution Agreement, will exempt eligible Indian professionals and employers from paying into Britain’s National Insurance Residence Scheme for up to five years, benefiting about 75,000 workers and 900 employers.
Furthermore, Indian professionals in the UK and British professionals in India will no longer have to make double payments of social security taxes.
According to the Indian government, this agreement will also benefit IT services, IT, financial and professional services, healthcare, education, engineering, telecommunications and consulting services.
In addition, mobility opportunities will be provided to approximately 1,800 Indian chefs, yoga instructors and classical musicians every year.
