The UK and India have reached a “landmark” trade deal following three years of negotiations between the two countries.
The deal will result in significant reductions on the rate of tariffs imposed on UK goods exported to India, with the aim of doing more business with India’s fast-growing economy of around 1.4 billion people.
Overall, there will be reductions on 90% of individual tariff rates on UK exports, with 85% of those becoming fully tariff-free within a decade.
The Government highlighted a dramatic cut to levies on whisky and gin exports, with rates being halved from 150% to 75% before reducing to 40% by the 10th year of the deal.
It is understood to be the first reduction of its kind for whisky exports – with a recent trade deal between India and Japan not resulting in lower tariffs for the spirit, despite Japan being a key producer.
Also seeing tariffs slashed is the automotive sector, with rates dropping from more than 100% to 10% as part of the deal.
It provides a boost to two sectors which look set to be hit especially hard by Donald Trump’s tariffs, which hiked the rate US firms will be charged for importing goods including cars, car parts, and materials.
Lower tariffs on UK exports to India also include:– Aerospace– Cosmetics– Food products including lamb and salmon, chocolate and biscuits– Soft drinks– Advanced machinery, electrical circuits and conductors– Medical devices
Meanwhile, UK consumers are expected to benefit from a range of tariffs being reduced on Indian exports to the UK as part of the negotiations between the two countries.
In particular, the Government agreed to remove a levy on Indian textiles – a major source of employment in India and incorporating some of the country’s lowest-paid workers.
Lower tariffs on Indian exports to the UK also include:
– Textiles and clothing– Footwear and leather– Food products including frozen prawns– Jewellery and gems– Sports goods and toys– Auto parts and engines
Furthermore, the negotiations saw the Government concede to changes that will make it easier for Indian professionals to come to the UK.
India secured a deal known as the double contribution convention (DCC) – which means Indian workers temporarily in the UK, and their employers, will not have to pay national insurance contributions in both countries for three years.
The same will apply to British workers in India.
It is expected to make it more attractive for Indian professionals to work in the UK.
However, there will be no formal changes to immigration policy under the new trade deal.
Another trade-off in the deal will make it more straightforward for Indian musicians, chefs, and yoga instructors to work in the UK.
This is because a capped number of workers in these professions will be able to apply for visas, having previously not had an accessible route into the jobs market.
It is understood that the concession was a specific request from India in the negotiations.
On the other hand, there were certain elements that both sides refused to back down on, and therefore have not been changed in the new trade deal.
The UK has not lowered tariffs on milled rice coming from India, due to concerns over how it would impact upon other producers, and India has not changed tariffs on UK dairy exports.
