India-UK trade dealImage Credit source: PTI PHOTOS
The British government has said that it has taken a big advantage by signing a Free Trade Agreement (FTA) with the fast-growing Indian economy before the European Union (EU). The government claims that the European Union has also made Britain’s deal the basis of its agreement with India.
The India-UK Comprehensive Economic and Trade Agreement (CETA) was discussed in the House of Commons this week. The opposition Conservative Party said a better deal could have been made with India, one of the world’s fastest growing major economies. Opposition leader Andrew Griffith taunted that the Prime Minister has brought a weak deal instead of a strong agreement.
This is a historic agreement
Responding to a question raised by the opposition on the trade deal, Minister of State for Trade Chris Bryant said that this agreement is a historic achievement. He said that this will open India’s doors more than ever for British businesses. He said that this agreement has got the support of big organizations like Federation of Small Businesses, HSBC, Standard Chartered, EY, The City UK and Revolut.
Boom in trade, India becomes important partner
The minister said that last year there was a trade of 47.2 billion pounds between India and Britain, which is 15 percent more than a year ago. India has now become Britain’s tenth largest trading partner. He also said that India’s growth rate is the highest among G20 countries. India is expected to become the world’s third largest economy by 2029. By 2050, there will be about 25 million rich consumers in India and the demand for imports could reach 2.8 trillion pounds. If foreign investment (FDI) in India continues to grow at this pace, it can reach 1 trillion pounds by 2033.
What will be the benefit of FTA?
The British government said that this deal will increase Britain’s GDP by 4.8 billion pounds every year till 2040. There will be an increase of 2.2 billion pounds in salaries and there will be an increase of 25.5 billion pounds in trade between the two countries. India will reduce tariffs on 90 percent of goods. This will benefit 92 percent of Britain’s exports. Once the agreement is implemented, Britain will get tariff savings of 400 million pounds every year, which will increase to 900 million pounds in 10 years. India’s average tariff will reduce from 15 percent to 3 percent.
Britain ahead of EU
The minister said that he is happy that the European Union has also taken steps towards an agreement with India, but Britain will get the benefit of reaching an agreement first. If everything happens on time, this agreement can come into effect by the end of summer. After this, British businesses will immediately start getting the benefit of lower tariffs. Britain will also get access to India’s £38 billion government procurement market.
relief from double tax
An agreement, Double Contribution Convention, has also been signed between the two countries in Delhi this week. Under this, skilled employees working temporarily will not have to pay social security tax twice in both the countries. Some opposition leaders raised questions on this. But the minister clearly said that this will not harm British workers and there is no attempt to make Indian workers cheaper. This will apply only to highly skilled temporary employees.
Although the government wanted a bilateral investment treaty (BIT) to be signed as well, it said that it was ready to start negotiations whenever India was ready. Now this agreement is being reviewed in the British Parliament. After discussion in both houses and investigation by committees, it will be implemented in the coming months.
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