India UK CETA: Benefits expected to accrue to both countries amid global economic turmoil

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India’s recently signed trade agreement with the UK and efforts to boost bilateral trade and investments have become a key priority for the two countries against the backdrop of global economic developments – and, most importantly, high tariffs imposed by the US.

While the UK was already eyeing the trade deal, the first such initiative since secession from the European Union, India is seeking to diversify its export markets after facing 50% tariffs on its goods by the US.

It is not surprising then that the India-UK joint statement, issued during the two-day visit of UK Prime Minister Keir Starmer to Mumbai, focused on the growth of investment and trade between the two countries. Prime Minister Narendra Modi and UK Prime Minister Starmer held limited-edition and delegation-level talks in Mumbai on October 9, where they expressed satisfaction with the upward trajectory of the India-UK Comprehensive Strategic Partnership. The two leaders also participated in the reconstituted Indo-British Forum.

“The two leaders look forward to ratifying the India-UK Comprehensive Economic and Trade Agreement (CETA) as soon as possible to realize its benefits,” the joint statement said.

While CETA was signed on July 24 during Prime Minister Modi’s visit to the UK, its actual activation is still months away as it needs to be ratified by the UK Parliament. According to officials, the process could take a few months or up to a year and could take effect by next July.

“The Prime Ministers also welcomed the reappointment of the Joint Economic and Trade Committee (JETCO), which will support the governance and use of CETA and drive forward our broader trade and investment partnership,” the statement also said.

Starmer came with a delegation of 125 UK CEOs, business people, university vice-chancellors and cultural leaders seeking opportunities in India.

India is already the second largest investor in the UK, and more than 1,000 Indian companies operate in the UK, supporting millions of UK jobs.

According to a statement from the UK government, nearly 7,000 new jobs will be created in the country thanks to a raft of major new deals secured by the Prime Minister during his visit to India this week.

“64 Indian investors have confirmed their confidence in the UK as a business destination with a collective investment of £1.3 billion in some of Britain’s most thriving companies – demonstrating the impact the UK-India trade deal is already having on investor confidence,” she said. These companies include TVS Motors, TVS Mobility, Muthoot Finance UK, Cyient and Nazara Technologies.

The trade agreement aims to double bilateral trade to about $130 billion by 2030, from about $56 billion at present. The agreement stipulates that 99% of India’s exports to the UK are exempt from customs duties, covering almost the entire trade basket. India has reduced tariffs on several UK sectors, including aviation, automobiles and electrical machinery.



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