By Alistair Smout and Shivangi Acharya
LONDON/NEW DELHI, June 17 (Reuters) - A free trade deal between Britain and India will come into force next month after India said its concerns over the UK's forthcoming steel tariff regime, which threatened to delay implementation of the agreement, had been addressed.
Britain and India agreed a long-coveted free trade pact last year, binding the world's fifth- and sixth-largest economies in one of the most ambitious deals of its kind in the shadow of tariff turmoil
sparked by U.S. President Donald Trump.
The deal is forecast to boost British GDP by £4.8 billion ($6.5 billion) and increase bilateral trade by £25.5 billion in the long run, according to UK government figures.
Under the agreement, India will cut whisky tariffs to 40% from 150% by the deal's 10th year, and automotives to 10% under a quota from 100%, with Britain cutting tariffs on goods such as clothes, footwear and some food.
COUNTRIES MOVE FORWARD WITH FTA AFTER LEADERS MEET
On Wednesday the two countries agreed to move ahead with implementation of the trade deal on July 15 after British Prime Minister Keir Starmer held talks with his Indian counterpart Narendra Modi at a G7 leaders summit in France.
"A historic milestone for India-UK relations," Modi said on X, adding the agreement would "significantly boost our bilateral trade and investment."
Indian officials had previously raised the prospect of reopening or delaying the application of the FTA over concern about the impact of new UK steel trade measures, due to come into effect on July 1.
In an effort to shield its domestic industry from a surge in global supply, Britain will sharply reduce tariff-free quotas for steel and impose steep duties on shipments beyond those limits from next month, though details of the measures are still being finalised.
The Indian government on Wednesday said 85% of Indian exports would not be impacted by Britain's steel measures, and lines that were covered by the measures would have access through quotas and other means.
"Following constructive deliberations... both sides mutually agreed to protect commercial interests, minimize market disruptions, and ensure an overall balanced and stable trading environment for exporters," the Indian government said.
A British official previously said that talks to implement the FTA were separate to the steel trade measures, and Wednesday's announcement by the British government made no reference to any separate deal on steel.
The free trade deal will come into effect almost exactly a year after it was signed, which Britain said was the quickest ever turnaround following signature. Indian officials previously suggested the steel dispute prevented earlier implementation in May, though Britain never put a timescale on talks.
"The deal gives British exporters an edge over international competitors," British Business and Trade Secretary Peter Kyle said in a statement.
Britain and India have also agreed that workers will no longer have to make social security contributions in both India and Britain while on temporary postings to the other, and on Wednesday said they had extended the length of time workers could be exempted from so-called "double contributions" under the scheme to five years from three.
($1 = 0.7462 pounds)
(Reporting by Alistair Smout and Shivangi Acharya in New Delhi; additional reporting by William James and Muvija M in London, Editing by William Maclean)
