UK and India sign hard-fought free trade agreement

London and New Delhi signed a free trade agreement on Thursday after years of arduous negotiations on Indian textiles and British whisky, during prime minister Narendra Modi’s visit to the UK.

This agreement, concluded in May, is the “most economically significant since the UK’s exit from the European Union”, said British prime minister Keir Starmer. He welcomed a “historic day” for both countries at a press conference held at Chequers, Starmer’s country residence northwest of London.

India, the world’s fifth-largest economy and most populous country, is a gigantic market of 1.4 billion people. “We have unique historical, family and cultural ties, and we want to further strengthen our relationship to make it even more ambitious, modern and forward-looking,” Starmer insisted.

Modi, for his part, welcomed the “writing of a new chapter” between India and the UK, two “natural partners”, after “many years of hard work” to achieve this.

Negotiations began in 2022 during Boris Johnson’s time in office. They were revived at the end of February when US President Donald Trump began to wave the threat of tariffs, some of which have since been implemented. The agreement with India will increase bilateral trade by 25.5 billion pounds. However, it will ultimately only add 4.8 billion pounds per year to Britain’s GDP, estimated at 2.8 trillion pounds, according to official figures.

In particular, London will reduce its own tariffs on clothing, footwear, engineering goods and food products produced in India. In return, it should allow for a reduction in tariffs on British goods exported to India from an average of 15 percent to three percent. This includes whisky, which will be taxed at 75 percent instead of 150 percent, then at 40 percent within ten years; parts used in aeronautics; and medical devices.

The UK, which imports about a third more from India than it exports there, has retained strong economic and cultural ties with its former colony. 1.9 million people of Indian origin live in the country.(AFP)

This article was translated to English using an AI tool.

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