A TRADE LIFELINE AMID TURBULENCE: THE U.K. FTA MAY SHAPE INDIA'S FUTURE TRADE DEALS, INCLUDING WITH THE U.S. AND THE EU.

THE U.K. FTA MAY SHAPE INDIA'S FUTURE TRADE DEALS, INCLUDING WITH THE U.S. AND THE EU. BY JOE C. MATHEW

- JOE C. MATHEW

“A BEACON OF HOPE amid the spectre of protectionism,” Rain Newton-Smith, chief executive of the Confederation of British Industry, did not mince words about the signing of the India-U.K. Free Trade Agreement (FTA). The response encapsulates relief amid an underlying wave of fear that has taken over global markets after U.S. President Donald Trump announced reciprocal tariffs.

“This historic deal is the biggest the U.K. has concluded since leaving the EU, and the most ambitious India has ever undertaken,” a U.K. government statement read after the May 6 deal. According to U.K. India Business Council chair Richard Heald, “It matters when the fifth and sixth largest economies reach a trade agreement”.

India and the U.K. commenced the FTA talks in January 2022. More than three years and 14 rounds of negotiations later, they agreed on zero duty access to 99% of India’s goods exports to the U.K., as well as the removal or reduction of tariffs on 92% of imported goods to India. The deal is a shot in the arm for India’s labourand tech-intensive manufacturing sector.

“Indian companies that manufacture products like automotive parts, textiles, jewellery, toys, etc., are probably going to sell more in the U.K.,” says Saurabh Agarwal, Tax Partner, EY.