India's trade surplus with the United Kingdom has seen a slight increase over the past decade, and the newly agreed Free Trade Agreement (FTA) is expected to significantly enhance overall trade between the two nations, according to a report by rating agency Icra.
Between 2014-15 and 2023-24, merchandise trade between India and the UK grew at a compound annual growth rate (CAGR) of 1 per cent. While imports from the UK rose at a CAGR of 6 per cent, exports to the UK grew at a slower pace of 4 per cent. As a result, India’s trade surplus with the UK increased marginally from USD 4.3 billion in 2014-15 to USD 4.5 billion in 2023-24, as reported news agency ANI.
The UK accounted for 1 per cent of India's total merchandise imports and 3 per cent of its total exports over the past decade. Icra highlighted that tariff concessions under the FTA are expected to strengthen the bilateral trade relationship.
"Tariff concessions on imports and exports are expected to improve the bilateral trade between the countries," noted Icra in its report.
The UK is a significant importer of goods from India, particularly in 13 categories, including precious metals, automobiles, pharmaceuticals, textiles, alcoholic beverages, and cosmetics. With the FTA in place, Icra anticipates that additional sectors may benefit as cost advantages for Indian products make them more attractive to UK consumers.
Under the terms of the FTA, 99 per cent of Indian exports will face zero tariffs, which is expected to open new export opportunities across multiple sectors such as textiles, metals, agriculture, electronics, sports goods, and leather. Additionally, 90 per cent of Indian imports from the UK will benefit from reduced or zero tariffs, providing cost benefits for Indian consumers.
The FTA is also expected to boost services trade, with India benefiting from the UK’s commitments in sectors such as IT/ITeS, financial services, professional services, business services, and education.
In terms of financial flows, the UK has been a key contributor to India’s Foreign Direct Investment (FDI) equity inflows, Foreign Portfolio Investments (FPI), and remittances. The FTA is also expected to ease professional mobility, exempting Indian workers from social security payments for up to three years, which is likely to further enhance remittances.
Icra also noted the strong presence of corporate entities operating in both countries and believes that the FTA will bring considerable benefits to Indian corporates in the UK and vice versa. India-UK FTA is expected to provide substantial opportunities for both nations, boosting trade, investment, and economic cooperation.
Between 2014-15 and 2023-24, merchandise trade between India and the UK grew at a compound annual growth rate (CAGR) of 1 per cent. While imports from the UK rose at a CAGR of 6 per cent, exports to the UK grew at a slower pace of 4 per cent. As a result, India’s trade surplus with the UK increased marginally from USD 4.3 billion in 2014-15 to USD 4.5 billion in 2023-24, as reported news agency ANI.
The UK accounted for 1 per cent of India's total merchandise imports and 3 per cent of its total exports over the past decade. Icra highlighted that tariff concessions under the FTA are expected to strengthen the bilateral trade relationship.
"Tariff concessions on imports and exports are expected to improve the bilateral trade between the countries," noted Icra in its report.
The UK is a significant importer of goods from India, particularly in 13 categories, including precious metals, automobiles, pharmaceuticals, textiles, alcoholic beverages, and cosmetics. With the FTA in place, Icra anticipates that additional sectors may benefit as cost advantages for Indian products make them more attractive to UK consumers.
Under the terms of the FTA, 99 per cent of Indian exports will face zero tariffs, which is expected to open new export opportunities across multiple sectors such as textiles, metals, agriculture, electronics, sports goods, and leather. Additionally, 90 per cent of Indian imports from the UK will benefit from reduced or zero tariffs, providing cost benefits for Indian consumers.
The FTA is also expected to boost services trade, with India benefiting from the UK’s commitments in sectors such as IT/ITeS, financial services, professional services, business services, and education.
In terms of financial flows, the UK has been a key contributor to India’s Foreign Direct Investment (FDI) equity inflows, Foreign Portfolio Investments (FPI), and remittances. The FTA is also expected to ease professional mobility, exempting Indian workers from social security payments for up to three years, which is likely to further enhance remittances.
Icra also noted the strong presence of corporate entities operating in both countries and believes that the FTA will bring considerable benefits to Indian corporates in the UK and vice versa. India-UK FTA is expected to provide substantial opportunities for both nations, boosting trade, investment, and economic cooperation.
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