India-UK Trade Deal to Kick Off on July 15 As Both Sides Clear Steel Quota Hurdle

New Delhi: India and the UK will operationalise their free-trade agreement starting July 15, they announced on Wednesday (June 17), with the two sides appearing to have overcome a sticking point in Britain's new steel sector safeguards.

Alongside the deal, another agreement exempting Indian and British workers in the other country from paying two separate social security contributions will also go into effect on July 15.

Prime Minister Narendra Modi hailed the deal's implementation as a “historic milestone for India-UK relations” and Union commerce and industry minister Piyush Goyal said the agreement's eliminating duties on 99% of tariff lines for Indian exports “will effectively level the playing field”.

Though the deal – reached in May last year and inked in July – was expected to come into force last month, the two sides hit a hurdle after the UK announced in March it would sharply reduce how much steel it would import free of tariffs and double the duty it levies on intakes above that quota.

Last month Union commerce secretary Rajesh Agrawal said the two sides were working on a “creative solution” to the steel measure – which he said was not factored into their negotiations – and looking to implement the free-trade deal. Earlier this month Reuters cited an unnamed Indian trade official as saying that New Delhi could reconsider concessions for Scotch whiskey under the agreement if its steel concerns were not addressed.

Goyal's ministry announced on Wednesday that India and Britain “have successfully reached a landmark consensus to safeguard and promote bilateral steel trade”.

Eighty-five percent of Indian exporters “are out of the steel measures”, it said, adding that under Britain's new restrictions Indian interests would be protected by way of country-specific and residual quotas as well as access under the Authorised Use Scheme.

Earlier on Wednesday Modi was heard telling British Prime Minister Keir Starmer over a hot mic on the sidelines of the G7 summit in France that “we did it”, in an apparent reference to talks over the steel issue.

New Delhi has said that under the deal Britain will completely eliminate duties on 99% of tariff lines for Indian exports. Domestic sectors that are to benefit include textiles, leather, footwear, gems and jewellery, marine products, and sports goods and toys.

Some 90% of tariff lines for British goods will undergo reductions under the deal and 85% of these are to hit zero within the next decade, according to the UK. Whiskey and gin will see Indian tariffs halve from 150% to 75% immediately and go down to 40% in the agreement's tenth year, while automobiles will see duties slashed from over 100% to 10% under a quota system.

UK business and trade secretary Peter Kyle said Wednesday the two sides are bringing their “landmark” trade deal into effect as early as possible so that British business and the public can feel the benefits immediately, including cuts to tariffs of £400m within the first year alone”.

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