By Prof HC Purohit
Entering into an FTA (Free Trade Agreement) with the UK will strengthen India’s democratic and economic credibility with Western nations. This agreement is a reflection of India’s growing global power and diplomatic competence. Along with accelerating business, trade, and economic activities, it will also positively impact sectors like health, environment, energy, and education.
Under the provisions of the World Trade Organisation (WTO), Free Trade Agreements (FTAs) are permitted with certain specific conditions and limitations to promote regional trade. These provisions include the reduction of tariffs and also stipulate that such agreements should not negatively affect trade with third-party countries. FTAs mostly include trade and commercial goods.
The main objective of the WTO is to make global trade both free and non-discriminatory. India has already signed FTAs with several countries, and the one with the UK will certainly boost the economies of both nations.
This agreement primarily includes removing duties on the export of leather, footwear, textiles, and labour-intensive products from India, while making the import of cars and whisky from the UK cheaper. The bilateral trade between India and the UK stands at around 58 billion USD, whereas UK-China trade is approximately 132 billion USD. Hence, this agreement is expected to boost India’s trade volume and contribute to sustained GDP growth.
After signing the FTA, most Indian products will be exempt from duties in the UK market, making them cheaper compared to goods from other countries. Though the UK’s trade with China is more than double that of India, there is no FTA between the UK and China. Therefore, once India signs the FTA, Indian products—especially leather goods, jewellery, textiles, chemicals, electronics—will become more affordable in the UK market, leading to increased demand.
Removing tariffs on Indian goods will likely increase their trade volume beyond that of China. India will also be able to import chocolates, medical equipment, automobiles, liquor, and other food products from the UK at lower prices, which will promote job creation and economic growth.
India already has FTAs with Japan, South Korea, Australia, Sri Lanka, the UAE, Singapore, and ASEAN countries.
A Glimpse of Past FTAs and Bilateral Trade
Country – Year – Key Sectors/Products
ASEAN – 2009 – Spices, agricultural products, electronics, machinery, automobiles.
Japan – 2011 – Technical cooperation, skill development, automobiles, pharma, machinery.
South Korea – 2010 – Electronics, automobiles, vehicles, chemicals.
UAE – 2022 – Gems & jewellery, energy, textiles, petroleum products.
Australia – 2022 – Education, services, textiles, agriculture, coal, aluminium.
Sri Lanka – 1998 – Tourism, tea, cement, marine and agricultural products.
Singapore – 2005 – IT, banking, finance, investment, education.
India’s exports have increased through these FTAs, leading to job creation as well. Indian industries are not only getting access to cheaper raw materials but also receiving technical cooperation.
The primary benefit of FTAs is that domestic industries get access to new export markets where they can sell their products and services, earning foreign exchange in the process. Consumers also benefit from more choices and better quality products at lower prices. FTAs encourage technology transfer and generate employment opportunities.
Such agreements help attract foreign investment, strengthen economic and trade relations between two countries, and also foster strategic and diplomatic cooperation.
The FTA with the UK will create employment opportunities in the micro, small, and medium enterprises (MSME) sector and the services industry. For this, India’s youth must be equipped with timely and necessary skills so that the demographic dividend can be utilised effectively. This achievement reflects India’s multipolar diplomacy and will bring long-term benefits to the national economy.
(Prof HC Purohit is Dean, School of Management, DSW & Coordinator, Centre for Hindu Studies, Doon University, Dehradun.)
