President's Message

K. M. Subramanian

 

India, UK Sign Trade Pact – ‘HISTORIC MILESTONE’

It Will Deepen Strategic Partnership

India and the UK have signed the long-awaited Free Trade Agreement and the Double Contribution Convention, which would "further deepen our comprehensive strategic partnership and catalyse trade, investment, growth, job creation, and innovation in both economies".

Strengthening alliances and reducing trade barriers with economies around the world is part of their plan for change to deliver a stronger and more secure economy. The conclusion of a balanced, equitable and ambitious FTA, covering trade in goods and services, is expected to significantly enhance bilateral trade, generate new avenues for employment, raise living standards, and improve the overall well-being of citizens in both countries. It would also unlock new potential for the two nations to jointly develop products and services for global markets.

The FTA is projected to boost annual bilateral trade by £25.5 billion, increase UK GDP by £4.8 billion, and raise wages by £2.2 billion in the long term. In 2024, total UK exports to India stood at £17.1 billion, while imports from India reached £25.5 billion, making India the UK's 11th-largest trading partner. Britain has called this the most economically significant bilateral trade deal it has signed since leaving the European Union in 2020.

One of the major beneficiaries of this agreement is India's ready-made garment (RMG) sector. The UK is among the world's top five RMG markets, with imports worth approximately US$20 billion in 2024. Currently, India holds a 6% share of the UK's RMG imports, while competitors like Bangladesh, Turkey, Cambodia, Vietnam, and Italy enjoy duty-free access. This had previously given them a competitive edge over India.

However, the FTA has addressed this imbalance by including RMG in the list of products subject to reduced tariffs on imports from India. As a result, India's RMG market share in the UK is expected to double to 12% within the next three years.

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The India-UK FTA comes at a crucial time, offering a significant opportunity for India's textile industry amid global uncertainties such as the ongoing Russia-Ukraine conflict, the Israel-Hamas war, and unresolved tariff issues with the United States. It levels the playing field for Indian exporters and strengthens the sector's position in a key international market.