The UK and India are on track to conclude a free trade agreement (FTA) in the near future with over two thirds of the negotiating chapters completed. This will boost bilateral trade and investment, create jobs and enhance cooperation in various sectors. The FTA will build on the existing Enhanced Trade Partnership that was announced in May 2021, which paved the way for deeper trade and economic ties between the UK and India. As India is now the largest country in the world by population, this is a significant agreement.
The UK and India already have a strong and strategic partnership, with trade between the two countries worth around £23 billion a year, supporting more than half a million jobs. The UK is the sixth largest investor in India, while India is the second largest investor in the UK. The two countries also share common values and interests in areas such as democracy, security, climate change, education and health. The FTA will aim to further liberalise trade in goods and services, reduce tariffs and non-tariff barriers, improve regulatory alignment and promote sustainable development. Some of the key sectors that are expected to benefit from the FTA include:
- Healthcare: The FTA will facilitate the export of UK healthcare products and services to India, such as pharmaceuticals, medical devices and digital health solutions. It will also enable greater collaboration on research and development, clinical trials and vaccine production.
- Technology: The FTA will support the growth of the UK-India tech partnership, which aims to foster innovation, digital skills and entrepreneurship in both countries. It will also create opportunities for UK tech firms to access the Indian market, which is one of the fastest growing digital economies in the world. For example, CMR Surgical has exported its next-generation ‘Versius’ surgical robotic system to India, worth £200 million and creating 100 new UK jobs.
- Low carbon growth: The FTA will promote green trade and investment between the UK and India, which are both committed to achieving net zero emissions by 2050. It will also enhance cooperation on clean energy, electric mobility, green finance and climate resilience. For example, £200 million of the new UK-India trade and investment deals announced in May 2021 were related to low carbon growth.
- Food and drink: The FTA will open up new markets for UK food and drink exporters to India, which is one of the largest consumers of food and beverages in the world. It will also reduce tariffs and non-tariff barriers on agricultural products, such as dairy, meat, fish and wine. For example, Loch Fyne Oysters has secured a deal worth £37 million to export its smoked salmon to India over the next five years.
- Textiles: Indian textile companies have suffered a major disadvantage with high tariffs selling into the UK, where their immediate neighbours have tariff free access.
This agreement will level the playing field and should reduce costs to UK consumers. The opportunities from a UK-India FTA are immense, as both countries have complementary strengths and huge potential for growth.
The FTA will not only boost bilateral trade and investment, but also strengthen strategic ties and mutual understanding between the UK and India. The agreement will also support both countries’ recovery from the Covid-19 pandemic and their transition to a greener and more resilient future. The UK is already the second largest exporter of services in the world and has decades long associations with Indian operations; this deal will provide significant further opportunities for this vital UK sector.
The Indian economy has transformed over the last few decades with 10 fold growth in GDP over the last 18 year and further massive anticipated growth over the rest of this decade. This is leading to rapid growth in the professional and middle class sector, which is estimated to have already reached 6 or 7 times the total population of the UK. The opportunities in the dynamic Indian market for UK companies are huge and growing and any reader who has not started looking at this exciting market yet, should certainly consider doing so.
Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com