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- India and UK Conclude Free Trade Agreement, PM Modi Terms IT Historic Milestone
New Delhi31 minutes ago
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Negotiations were going on between India and the UK on 13 January 2022 regarding the free trade agreement.
India has signed a Free Trade Agreement (FTA) with the United Kingdom (UK) to promote belator relations. Along with this, both countries have also agreed to the double contribution convention. With this agram, UK’s luxury cars, branded clothes and footwear in India can be cheap.
Prime Minister Narendra Modi wrote on the social media platform x, ‘It was very happy to talk to his friend Prime Minister Kir Stmper. As a historical achievement, India and Britain have completed the free trade agreement as well as the double contribution convention successfully.
These historical agreement will deepen our strategic partnership. Apart from this, both of them will promote trade, investment, growth, job creation and innovation in economy. I am eager to welcome the Prime Minister’s Stmper to India soon.
FTA between the two countries can make these goods cheap-
- Cars: Especially Britain’s luxury cars like Jaguar Land Rover can now be available at a low price.
- Scotch whiskey and wine: The tariff on alcohol and wine coming from England will be reduced, which will make it cheaper than before.
- Fashion and Clothes: Branded clothes, fashion products and homeware coming from Britain can also be cheap.
- Furniture and Electrical goods: Furniture, electronics and industrial machinery coming from Britain can now be found at a low price.
- Jewelery and Gems: India’s gems and jewelery will be sold cheaply in Britain, which can make products cheap for Indian customers in Britain.
Negotiations about the agreement between India-UK started in 2022
The conversation between India and the UK started on 13 January 2022, which has now been completed after about 3.5 years. On February 24, Commerce and Industry Minister Piyush Goyal and UK business and trade secretary Jonathan Rrenalds announced to resume the proposed FTA between the two countries.
Since 2014, India has signed 3 such free trade agreement with Mauritius, UAE, Australia and EFTA (European Free Trade Association). India is actively negotiating on similar agreements with the European Union (EU).
What is a double contribution convention?
When a person or employee goes to work from one country to another, it may usually have to contribute for social security (such as pension, PF, etc.) in both countries. This makes his salary cut twice – one in his country and one in the country where he is working.
The Double Contribution Convention is an agreement that occurs between two countries. Due to this, people and companies working abroad do not have to pay for social security (eg pension, PF, etc.) in two countries at the same time. This benefits both employees and companies and their salary does not cause double cuts.
Double contribution convention works in two ways
- Usually, the employee gets the facility to choose in which country it will give money for social security (eg pension, PF, etc.).
- Or in the country where he is working, he gets exemption from social security contribution.
How many types are trade agreement?
Free trade agreements are given different names according to its nature. These include PTA (preference), RTA (Regional) and BTA (Bilateral). WTO names RTA to all such economic engagements. In PTA some items are made duty free (Indo-Thiland).
At the same time, CECA (Compressive Economic Corporation Agreement) or CEPA (Compressive Economic Partnership Agreement-India-Korea, Japan) or TEPA (Trade and Economic Partnership Agreement)-Its scope is high.
With which countries India have signed these agreements?
India have made trade agents with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, Korea, Japan, Australia, UAE, Mauritius, ASEAN and EFTA blocks.
According to Global Trade Research Initiative (GTRI), India has shifted its FTA focus to Western partners from East (ASEAN, Japan, Korea) after receiving a deal with large economies in Asia.
India is now giving priority to FTA with EU and US to expand exports and strengthen trade relations with large economies of West.
What will India benefit from FTA in merchandise trade?
- In FY 2024, the UK was exported for a value of $ 12.9 billion, or Rs 1.12 lakh crore from India. GTRI founder Ajay Srivastava says that this agreement will give further boost to these exports. Because, more than half of Indian products are already exported to UK without less or without tariffs.
- The average tariff on imported goods in UK from India is 4.2%. There will be no benefit from reducing the fee on Indian products of value of $ 6.8 billion i.e. Rs 59,241 crore in the UK, because even without FTA, there is already no tariff in the UK. He said that these products include petroleum products, medicine, diamonds, machine parts, airplanes and wooden furniture.
- At the same time, reducing duty on Indian exports of value of US $ 6.1 billion i.e. Rs 53,139 crore will be beneficial. Such as textiles apparels (shirts, trousers, women’s traditions, bed linen), footwear, carpets, cars, marine products, grapes and mango, these products are less tariffs in the UK.
- GTRI said that in FY 2024, India had a merchandise import of US $ 8.4 billion, or Rs 73,175 crore from UK. A export of 91% of the Total Merchandise Import from UK i.e. US $ 7.6 billion i.e. 66,211 crore rupees comes after the payment of average to high tariff duties in India.
- For example, the tariff on cars is 100% and it is 150% on Scotch whiskey and wine. The simple average tariff in India is 14.6% on the goods imported from the UK. The UK products that are expected to benefit from this FTA include the pressure metals, cars, makeup items, metal scrap, petroleum products, scotch and other alcohol, machinery and integrated circuits.
