A trade deal worth an estimated £6 billion was signed by Keir Starmer and his Indian counterpart, Narendra Modi. The UK prime minister hailed the momentous accord as a “historic day” for Britain and India.
Following more than three years of negotiations, the trade agreement will significantly lower tariffs on automobiles and whisky sent by British companies to India in exchange for Britain opening up its labour market to Indian workers.
The bilateral agreement, which will reduce the average tax on Indian imports from Britain from 15% to 3%, is regarded as one of the most beneficial of its kind to the UK economy. It is anticipated that the agreement will eventually increase bilateral trade between the two nations by £25.5 billion annually.
Key Terms of the UK-India Trade Agreement
The agreement, which was first announced in May, will reduce about 90% of all tariffs on UK-made goods transported to India, and within ten years, 85% of tariff lines will have no trade duties at all. UK-made whisky and gin import duties will be cut in half, to 75%, right away, and then reduced to 40% over the course of the following ten years.
In a similar vein, British automakers will have their export duties reduced from 110% to 10% over the same time period. However, similar to the UK’s previous trade agreement with the US, quotas will be imposed to limit the quantity of cars eligible for the reduced tax. Starmer praised the agreement as potentially having “huge benefits to both of our countries” during a press conference held at Chequers, the prime minister’s opulent country home.
He added, “The UK-India deal is now signed, sealed, and ready to be delivered.” “I’m really pleased and privileged to welcome you here today on what I consider to be a historic day for both of our countries and the delivery of the commitment that we made to each other,” he said.
Labour Mobility and Payroll Tax Controversy
However, political rivals have cautioned that a deal to eliminate employer national insurance for Indian employees in the UK and vice versa runs the risk of undercutting British employees and eroding any financial gains.
The agreement will exempt British companies from paying payroll taxes on Indian employees who transfer within the UK, raising concerns that, in light of the April increase in UK national insurance, hiring Indian employees would be more desirable than hiring UK employees.
Financial Sector Left Out of Trade Gains
Although both nations committed to keep working to reduce economic barriers to the city’s linkages with the quickly expanding Indian economy, the accord has also come under fire for failing to make any headway in the UK’s world-class financial and professional services industries.
“This isn’t just paving the way for economic partnership but also a blueprint for our shared prosperity,” Modi remarked as he stood next to Starmer. The agreement marked “the dawn of a new golden era in the relationship between these two vibrant nations,” according to Amarjit Singh, founder and CEO of the India Business Group.
“This partnership goes beyond conventional ideas of trade in today’s more interconnected yet complex global landscape; it embodies a collaborative effort to shape a sustainable and prosperous future together,” he continued. “It is now the business community’s responsibility to take advantage of these opportunities and implement the framework in tangible ways.”
Leave a Reply