Post by : Meena Ariff

Photo: Reuters

The United Kingdom and India have finally signed a historic trade deal after three years of discussions. This deal will make cars and whisky from the UK cheaper in India. Similarly, textiles, jewellery, and other products from India will also become cheaper in the UK. This agreement is seen as a big step to strengthen business ties between the two countries.

Meeting Between Leaders

After signing the deal, Indian Prime Minister Narendra Modi met King Charles at his private estate, Sandringham, in Norfolk. Before this, Modi met UK Prime Minister Sir Keir Starmer at Chequers, where the agreement was officially signed. During the visit, Modi gifted King Charles a tree that will be planted in autumn. This gift symbolises Modi’s environmental campaign encouraging people to plant a tree in tribute to their mothers.

Significance of the Deal

Sir Keir Starmer described this agreement as “the biggest and most economically significant” trade deal Britain has made since leaving the European Union (Brexit). He said this deal is signed, sealed, and delivered. According to him, it sends a strong message that Britain is open for business and it is boosting confidence in the country’s economy.

Benefits for Both Countries

The trade deal is expected to create more than 2,200 new jobs in the UK. Indian companies will expand their operations in the UK, and British companies will get better opportunities in India.

Prime Minister Modi called the deal “a blueprint for our shared prosperity.” He said that Indian products like textiles, footwear, jewellery, seafood, and engineering goods will get better market access in the UK. On the other hand, people in India will be able to buy UK-made products such as medical devices and aerospace parts at more affordable prices.

Economic Impact

According to the UK government, this deal will boost the British economy by £4.8 billion every year. However, the deal still needs approval from the UK parliament before it comes into effect, which might take at least a year.

Changes in Tariffs

The agreement will reduce tariffs (taxes on imports and exports) on many products. Here are some examples:

• For Indian exports to the UK:
• Clothing, shoes, jewellery, gems, seafood, and engineering goods will become cheaper in the UK.
• For UK exports to India:
• Whisky tariffs will drop from 150% to 75%, and will further fall to 40% by 2035. Cars, gin, whisky, aerospace equipment, electricals, medical devices, cosmetics, lamb, salmon, chocolates, biscuits, and luxury cars will also see reduced tariffs.

Average tariffs for UK products going to India will drop from 15% to 3%, making it easier for British businesses to sell their goods in India.

Other Agreements

The two countries also agreed to work together in areas like defence, education, climate change, technology, and innovation. They decided to improve intelligence sharing to fight corruption, organised crime, and illegal migration. A new agreement will also allow better sharing of criminal records between both countries, which will help courts maintain accurate watchlists.

Criticism and Responses

Some people in the UK were worried that the deal would harm British workers because Indian workers coming to the UK might be cheaper to hire. But Business Secretary Jonathan Reynolds said this is “completely wrong.” He explained that Indian workers on temporary assignments will get the same treatment as workers from other countries.

The agreement also allows workers from both countries to only pay social security contributions in their home country, not in both countries. This is similar to what the UK already has with 17 other countries, including the US and EU nations.

Political Reactions

Conservative Party leaders said the trade deal was possible only because of Brexit and praised it as a positive step. However, they criticised the current government’s tax plans, saying these will harm businesses despite the gains from the trade deal.

On the other hand, Liberal Democrats said Brexit has harmed UK jobs and growth. They called for a better customs agreement with the European Union, stating that although this deal with India is good, it is small compared to what a strong EU deal could offer.

The UK wanted better access to India’s financial and legal service industries, but this was not achieved in the current agreement. Talks will continue on a bilateral investment treaty to protect investments on both sides. India is also worried about the UK’s plans for taxes on high-carbon industries, which could affect Indian exports unfairly.

This trade deal between the UK and India is a major milestone. It shows how two countries with deep historical ties can work together for mutual economic growth. Leaders from both nations hope that this deal will strengthen their relationship further and bring more opportunities for people in both countries in the coming years.