New Trade Treaty between UK/India
The United KIngdom was formerly the colonial power within the Indian subcontinent. As such, it maintains a very close relationship not just with India, but also with Pakistan and Bangladesh. India has come up the economic rankings after a series of free market reforms enacted by the late Indian Prime Minister Manmohan Singh. India is now striding ahead on the basis of a young workforce and growing inward investment. The country has also made huge gains in technology based sectors such as aerospace and shipbuilding.
The United KIngdom has just agreed a new trade deal with India after a process of negotiation that took three years. This is hoped to boost trade between both countries by £25 billion a year by 2040. The UK will cut tariffs on imports of clothing, footwear and jewellery. In return, India will cut tariffs on British exports of high value cars, aerospace and electrical products as well as gin and whisky. Tariffs of 100% levied on UK exports of more expensive cars will fall to 10% and a quota will stabilise the total number of vehicles concerned.
Some workers will also be given exemptions from paying into social security. This applies to staff of Indian companies transferred to the UK on a temporary basis and vice versa. Therefore any contributions will be paid by employers and staff in their home country only. The UK does have this sort of agreement in place already with other countries such as the USA and South Korea.
Given the fact that India is the world’s fifth largest economy already, it made sense for the United Kingdom to put together a deal for mutual benefit. Both countries were able to negotiate as equal partners as opposed to screaming expletives at each other over trade deficits, It proves that diplomacy can work when everyone sits round a table as compared to constant leaks on social media sites such as Instagram.
(see www.bbc.co.uk/business)
Mark Sandford - Permission granted to freely distribute this article for non-commercial purposes if attributed to Mark Sandford, unedited and copied in full, including this notice.
Members can discuss this and other articles on the economics forum at International Mensa.