India will sign a free trade agreement with UK: 14 rounds of talks completed between the two countries, know what will be the benefit to India from this?
India has signed 13 free trade agreements (FTAs) and six preferential agreements with its trading partners to boost exports of goods and services. Through these agreements, India wants to increase the reach of its domestic industry to global markets.
Since 2014, the country has signed 3 such free trade agreements with Mauritius, UAE, Australia and EFTA (European Free Trade Association). India is actively negotiating similar agreements with the UK and the EU.
On 24 February, Commerce and Industry Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds have announced the resumption of negotiations for the proposed FTA between the two countries.
This dialogue between India-UK is resuming after more than 8 months. Earlier, talks between the two countries started on 13 January 2022. Till now 14 rounds of talks have been completed.
What will be the benefit of FTA to India in merchandise trade?
In the financial year 2024, merchandise worth $12.9 billion i.e. Rs 1.12 lakh crore was exported from India to the UK. GTRI founder Ajay Srivastava says that this agreement will further boost these exports. Because, more than half of the Indian products are already exported to the UK with low or no tariff.
The average tariff on goods imported from India to the UK is 4.2%. There will be no benefit in reducing the duty on Indian products worth $6.8 billion i.e. Rs 59,241 crore in the UK, because even without FTA, there is already no tariff on them in the UK. He said that these products include petroleum products, medicines, diamonds, machine parts, airplanes and wooden furniture.
At the same time, there will be benefit from reducing the duty on Indian exports worth US $ 6.1 billion i.e. Rs 53,139 crore. Such as textile apparels (shirts, trousers, women’s traces, bed linen), footwear, carpets, cars, marine products, grapes and mangoes, these products attract low tariffs in the UK.
GTRI said that India’s merchandise imports from the UK stood at US$ 8.4 billion or Rs 73,175 crore in FY24. 91% of the total merchandise imports from the UK, or US$ 7.6 billion or Rs 66,211 crore, come to India after paying average to high tariff duties.
For example, the tariff on cars is 100% and on Scotch whisky and wine it is 150%. The simple average tariff in India on goods imported from the UK is 14.6%. UK products that are expected to benefit from this FTA include precious metals, cars, makeup items, metal scrap, petroleum products, scotch and other alcohols, machinery and integrated circuits.
