It took three years of intense and sometimes gridlocked negotiations, but finally in May – galvanised, it seems, by Donald Trump's imposition of global tariffs – India and the UK reached a long-awaited free trade agreement (FTA).The bilateral deal might not be quite signed, sealed and delivered. Officials in New Delhi reckon the signing and sealing could still be three months away, while delivery could take over a year. Even so, Narendra Modi and Keir Starmer were quick to sing its praises.The British Prime Minister hailed the “landmark” agreement as one that would boost the economy and “deliver for British people and business”. His Indian counterpart described the deal as an historic milestone that would “catalyse trade, investment, growth, job creation, and innovation in both our economies”.Headline moves in the FTA included lower or no tariffs on clothing and footwear, cars, food and jewellery arriving in the UK from India; and on whisky, gin, aerospace, electricals, medical devices, some foodstuffs and cars going the other way.One major — and mildly controversial — concession made by the British was to free intra-company transfers coming from India, along with other Indian business professionals arriving on temporary visas, from having to make national insurance contributions in the UK for up to three years, as long as they were still making social security payments in India.

Greater business mobility

Some opposition MPs maintained that such a concession would lead to a surge in immigration and undercut British workers. But the government emphasised that the FTA preserved the UK's existing points-based immigration system. And Douglas Alexander, Minister of State at the Department for Business and Trade, pointed out that the deal only covered business mobility as it was about travel for specific and temporary business purposes.The government in London estimates that the effects of the deal will boost trade between the two countries, which totalled £42.6 billion last year, by an additional £25.5 billion a year by 2040.According to The Times of India, the FTA not only marks a significant milestone in bilateral relations, but also greatly enhances professional mobility between the two nations. “This agreement will facilitate the movement of various professionals, including contractual service suppliers, business visitors, investors, intra-corporate transferees, and independent professionals,” the newspaper commented.It added that the deal would make it simpler for Indian professionals to work in the UK by introducing rules that streamlined employment laws and visa procedures. “Under business mobility options, the UK has increased the range of occupations for which highly qualified Indian experts can apply. However, to utilise these expanded routes, professionals must prove they have the necessary experience and qualifications for those specific roles, as the UK will require them to meet strict standards before allowing them to work in the country.”HR professionals in the UK believe the trade deal offers businesses the opportunity to address skills shortages and cut costs, but only if recruitment strategies and auxiliary risks are properly managed.“Employers need to be wary of, and manage, wider discrimination risks such as how different nationalities are treated in terms of job opportunities and recruitment processes, plus, how certain nationalities might be treated by colleagues during employment because of perceived preferential treatment,” said Rob Smedley, employment director at law firm Freeths, which specialises in business legal services in HR Magazine.Ashley Stothard, immigration executive at the firm, added that, if HR management is executed effectively, the FTA offers businesses an opportunity to address skills shortages, especially in sectors such as IT, engineering and healthcare.“These sectors often struggle to source workers from the resident labour market and so often look overseas. The trade deal means that UK businesses can look first to India, and benefit from the cost savings in national insurance contributions,” he said, adding that HR professionals would need to review their organisations’ recruitment strategy. “They should ensure that they’re up-to-date with immigration law and sponsor compliance, and prepare for an increase in overseas recruitment.”

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Sectors voice concerns

Yet not all sectors in the UK economy are happy with the deal, notably the pharmaceutical industry, which does not believe it offers sufficient support to businesses beyond the reduction in medical devices tariffs. The Association of the British Pharmaceutical Industry (ABPI) is particularly concerned that the FTA does not address areas such as intellectual property (IP) protections for innovators in the Indian market.“As one of the UK’s largest exporting sectors, it’s disappointing that this deal seemingly  won’t support the UK’s growth ambitions for pharmaceuticals,” said Richard Torbett, ABPI chief executive. “Robust intellectual property protections are fundamental for the innovation our companies deliver, but we believe an opportunity has been missed by the UK to demonstrate a commitment to high IP standards for our sector in this agreement. We urge the government to use ongoing negotiations with other key trading partners, including the EU, US, and Switzerland, to deliver agreements that better support Britain’s pharmaceutical industry.”David Henig, UK director at the European Centre for International Political Economy, also has reservations, describing the treaty as “very much a tariff reduction deal, with no mention of data or financial services”. But he added, “that's always been the most realistic landing zone. Talk of incredible levels of ambition always seemed unwise.”

Widespread approval

However, in general the arrival of the FTA —which followed a final round of negotiations between the UK’s Business and Trade Secretary Jonathan Reynolds and India’s Commerce Minister Piyush Goyal — has won widespread approval after being lauded as “the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU” by the Department for Business and Trade in London.Marco Forgione, director general of the Chartered Institute of Export & International Trade, said the agreement represented “welcome news to our members and the wider business community. It is a strong example of what can be done when good will and mutual benefits between trading partners are clear. With UK industries, such as automotive, currently feeling the challenges of the US tariffs, this deal comes at an opportune moment for a range of goods and services industries. With the deal due to increase bilateral trade between the UK and India by £25.5 billion, there are significant gains to be seized upon by British businesses right across the UK’s nations and regions. The benefits of our world-leading services businesses now having access to India’s £1.5 trillion services sector, and one that is growing at nearly 8% a year, is not to be underestimated.”Emma Rowland, trade policy adviser at the Institute of Directors, agreed that the pact offered new opportunities and easier access for exporters looking for growth. “With significant growth prospects on the horizon and a rising consumer base, India is an attractive place for UK companies to do business,” she said.“The global trading environment is currently  an unstable one, with greater fragmentation and increased levels of protectionism. In light of recent trade wars and US tariff related disruption, new partnerships that encourage free and open trade should be celebrated.”The deal with the UK could also open up fresh opportunities for India, not least the possibility of securing an FTA with the European Union, which has been the subject of on-off negotiations since 2012.Himanshu Tewari, a partner specialising in trade and customs at KPMG India, points out that the agreement with the UK comes on the heels of several other trade deals the Delhi government has reached in the recent past, starting with Australia and followed by the UAE, and with the four members of the European Free Trade Association: Norway, Switzerland, Liechtenstein and Iceland.“It demonstrates a very deliberate and sure-footed approach of expanding India’s FTA footprint for gaining market access for goods of Indian origin and opening new avenues of growth and international cooperation,” he says.“Successful negotiation of the FTA with the UK – till most recently being part of the EU – also bodes well for the progress that India will be able to make with EU FTA negotiations, which have been waiting for a decisive push after the past thirteen years of negotiations.”Viraj Mehta, the World Economic Forum’s head of the regional agenda for India and South Asia offered his perspective. “The deal between India and the UK is particularly important in a global environment of rising trade tensions and highlights the critical role of partnerships for shared progress and prosperity. India is a key growth engine for the world.”And the Brits are pinning their hopes on the FTA generating some key growth for them, too.

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