India-UK trade agreement promises 15 percent annual growth ahead

India has recently concluded a pivotal free trade agreement (FTA) with the United Kingdom aimed at enhancing bilateral trade. The agreement was finalized on May 6 after nearly three years of negotiations. Under the terms of the deal, India is set to reduce tariffs on 90 percent of British goods, with up to 85 percent becoming completely duty-free over a period of ten years. In exchange, the UK is expected to eliminate duties on various selected Indian products, leading to 99 percent of Indian exports being tariff-free. The FTA is anticipated to create significant opportunities for Indian companies to expand their footprint in the UK market, promoting investment and joint ventures, particularly in the services sector. According to CareEdge Ratings, this landmark agreement is projected to spur India’s economic growth, driving a compound annual growth rate of 15 percent in bilateral trade through to 2030. At present, the UK accounts for approximately two percent of India's overall trade, a figure that has seen growth at an 11 percent compound annual growth rate over the past decade. The agreement is particularly beneficial for sectors such as automobiles, whisky, industrial machinery, and pharmaceuticals, where substantial tariff reductions and streamlined regulations are expected. Indian exporters, who have faced challenges in the global market, are likely to find renewed enthusiasm as they gain improved access to the UK market, alongside the potential for stronger competitiveness and greater volumes of trade. The terms of the FTA are poised to significantly enhance the export performance of Indian products, making them more appealing to British consumers. In addition to the sectors mentioned, the gems-and-jewellery industry is forecasted to experience lucrative growth, taking advantage of the UK's affluent consumer base and established luxury market. Tariffs on various electrical and engineering goods, currently ranging from eight to fourteen percent, are also set to be eliminated. These measures underscore a decisive shift in India-UK economic relations, presenting new prospects for business interactions and bolstering the mutual economic framework, showcasing the importance of international trade agreements in today’s globalized economy.