UK, India ink FTA and vow improved ties

The leaders of the United Kingdom and India oversaw the signing of a free-trade agreement in London on Thursday that they say will be a boon to their economies.

The United Kingdom's Prime Minister Keir Starmer and India's Prime Minister Narendra Modi praised the deal that was tentatively agreed in May after three years of negotiations.

It means UK-made items that are popular in India, such automobiles, medicine, and whisky, should be cheaper there, while Indian-made products that are popular in the UK, such as clothing and jewelry, should be cheaper in the UK.

The UK imports around 11 billion pounds ($14.9 billion) worth of goods from India annually, while India imports 17.1 billion pounds worth of UK goods. The nations say the totals could now double.

But critics have said the deal opens the door to less-regulated, less-expensive Indian labor undercutting British workers and eroding their rights, especially in light of the fact that Indian workers in the UK will be exempt from National Insurance contributions for three years.

But the UK's Secretary of State for Business and Trade Jonathan Reynolds told the BBC the National Insurance exemption only applies to Indian workers seconded to the UK, so UK workers will not be undercut.

"I can categorically tell you that is not the case," he said on the BBC's Breakfast program. "There is no tax advantage for hiring an Indian worker over a British worker."

In fact, he said extra costs for visas and a surcharge for Indian workers using the UK's National Health Service mean "you'd actually pay more for an Indian worker … no-one is being undercut".

Starmer said he believes the deal will lead to 2,200 new jobs in the UK as Indian companies expand their UK operations. And he said British companies will benefit from new opportunities in India.

"Our landmark trade deal with India is a major win for Britain," he said. "We're putting more money in the pockets of hardworking Brits and helping families with the cost of living, and we're determined to go further and faster to grow the economy and raise living standards across the UK."

The UK government believes the deal will initially boost the nation's economy by 4.8 billion pounds a year.

Modi said through a translator that the countries are "natural partners" and are "writing a new chapter" in their history.

He added on the X social media platform that his trip is aimed at "furthering prosperity, growth, and boosting job creation for our people".

"A strong India-UK friendship is essential for global progress," he added.

India is the world's fourth-largest economy. The UK is its sixth-largest.

The nations also committed to a new bilateral plan to tackle illegal migration and vowed to collaborate on climate change, defense, education, innovation, and technology.

earle@mail.chinadailyuk.com