On Thursday, India and the UK signed the Comprehensive Economic and Trade Agreement that has been many years in the making. Leaders of both countries exuded confidence that the agreement would open up markets and bring enormous benefits to their countries. The goal is to double bilateral trade between the nations from roughly $56 billion now. The signing of the deal was accompanied by the unveiling of the UK-India Vision 2035 — which envisages greater engagement in areas such as defence, tech and education, indicating a desire to deepen the relationship between the two countries.

Through this trade agreement, said to be one of the most comprehensive deals that Delhi has entered into, India has indicated its willingness to bring down its tariffs substantially as it seeks to integrate more closely with developed countries and encourage more investment into the country. Delhi’s high tariff walls have been criticised by others, including the US. The Office of the United States Trade Representative had recently noted that India’s average applied tariff rate was 17 per cent, while that on agricultural products was even higher at 39 per cent. As per reports, under this new deal, the average tariffs on British products will fall from 15 per cent to 3 per cent, which could potentially lead to a large increase in UK exports. On the other hand, the agreement paves the way for “unprecedented duty free access for 99 per cent of India’s exports to the UK”, covering almost the entire trade basket. This includes labour intensive segments such as textiles, leather, footwear and gems and jewellery, as well as sectors like engineering goods and auto components. Alongside, India has secured significant commitments on services and labour mobility. The agreement increases market access in critical areas such as IT and IT-enabled services as well as financial, legal, professional and educational services. The double contribution convention agreement will help Indian professionals and their employers avoid making social security payments in the UK, thereby bringing down the costs of doing business.