Reserve Bank of India Governor Sanjay Malhotra welcomed the newly signed Free Trade Agreement (FTA) between India and the United Kingdom (UK) on Friday. He pointed out that it will benefit many sectors of the Indian economy, just a day after the trade agreement was signed.
The RBI Governor, while addressing the FE Modern BFSI Summit, said that such bilateral trade deals are increasingly important at a time when global cooperation through multilateral agreements has slowed down. “Hopefully it should help us... that is the way going forward now, because unfortunately multilateralism seems to have taken a back seat,” he said.
He further stated that India should pursue similar trade agreements with other countries, while adding that negotiations with the United States are already in “advanced stages”. Referring to the UK deal, Malhotra said, “It should help various sectors in our manufacturing as well as on the services side”. Many other trade pacts are currently under negotiation, he added.
He also expressed support for US Federal Reserve Chairman Jerome Powell, who is facing criticism from President Donald Trump. “He is doing a very good job. Maintaining independence of the central bank is very important. I think he has done a commendable job,” Malhotra said, as quoted by news agency PTI.
India-UK Free Trade Agreement
India and the UK signed the much awaited free trade agreement on Thursday with an aim to provide near-complete tariff elimination for Indian exporters and more than double the bilateral trade between the two countries to over $120 billion by 2030.
Officially known as the Comprehensive Economic and Trade Agreement (CETA), the FTA will benefit Indian farmers and exporters, who will now get duty-free access to the UK market for a range of products. Additionally, the FTA has been strategically crafted to deliver immediate and meaningful benefits to sectors with high employment intensity, especially textiles, leather, plastics, artisanal products and processed food segment.
Tariff Cuts After Trade Deal
In India, tariffs will be slashed on 90% of British goods, including EVs (luxury cars), scotch whiskey, cosmetics, and medical devices, among others. The Textiles and Clothing sector in the country, which was previously subject to duties of up to 12%, will now be completely removed for Indian exports to the UK.
Goods from the gems, jewellery, furniture and sports sectors were earlier subjected to duties of up to 4%. Now, these sectors will benefit from full duty elimination.
Additionally, Indian farmers will get preferential access to the UK’s $37.5 billion agri market and the $5.4 bn UK market for marine products will now open for Indian exports as the import duty on marine products from India will now fall to zero from up to 20%.
