India–UK Free Trade Agreement Signed: Doubling Trade, Enhancing Opportunities
Key Highlights
- Deal to double bilateral trade to $120 billion by 2030
- Duty-free access for 99% of Indian exports to UK
- Tariffs on British whisky to fall from 150% to 75% immediately
- Indian professionals gain new work rights in the UK across 36 sectors
- UK business access to $50 billion+ in Indian government tenders
In a landmark move, India and the United Kingdom have signed a historic Free Trade Agreement (FTA), marking a new era of bilateral economic cooperation. The agreement was formalised in London by Indian Commerce Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds, in the presence of Prime Ministers Narendra Modi and Keir Starmer.
Trade Goals & Scale
Negotiated over three years, the FTA aims to double bilateral trade to $120 billion by 2030 and boost annual trade flows by around $34 billion. Next, the deal will move to the British Parliament for ratification—a process expected to take up to a year.
Tariff Reductions and Market Access
The agreement ensures duty-free access for 99% of Indian exports to the UK. Average tariffs on British goods arriving into India will fall sharply, from 15% to 3%. Products like whisky, gin, chocolates, soft drinks, lamb, salmon, cosmetics, and electric vehicles will soon reach Indian consumers at much lower prices. Specifically, import duties on UK whisky will drop from 150% to 75% immediately, then to 40% within a decade. Tariffs on automobiles will reduce from over 100% to just 10%, subject to quota limits.
Indian industries such as leather, garments, marine products, engineering goods, toys, jewellery, and chemicals are expected to see significant export growth. This is particularly important for labour-intensive sectors, where the FTA is likely to generate new jobs and fuel competitiveness.
Agriculture & Services Sector Wins
India’s agricultural exports, currently valued at $36.6 billion, now have access to the UK’s vast $37.5 billion food import market. Previously, India supplied just $811 million to the UK in this sector. The deal paves the way for increased shipments of tea, mangoes, grapes, spices, and seafood.
The services sector stands out as another big winner. The FTA streamlines the movement of Indian professionals, including yoga instructors, chefs, musicians, IT experts, and contract service providers across 36 sectors in the UK. Critically, there will be no Economic Needs Test for several professions. Indian professionals can work in the UK for up to two years without needing a local office, benefiting an estimated 60,000 IT professionals a year from firms like Infosys, TCS, HCL, Wipro, and Tech Mahindra.
A newly introduced Social Security Agreement (Double Contribution Convention) will exempt Indian professionals on temporary assignments in the UK from duplicate social security payments for up to three years.
Strategic Gains for the UK
UK companies will benefit from reduced Indian tariffs on 90% of tariff lines, with 85% of these becoming duty-free over the next decade. British businesses also gain new access to India’s public procurement market, becoming eligible to bid on non-sensitive government contracts worth over ₹2 billion (approx. $25 million), opening up about 40,000 tenders annually.
The UK expects the creation of more than 2,200 new jobs, wage gains of up to £2.2 billion per year, and a surge in competitiveness for its exports. Cheaper clothes, shoes, vehicles, and food items are also forecast for UK consumers.
Beyond Goods: Innovation and Investment
The FTA is not just about trade in goods and services. It covers innovation collaboration, intellectual property rights, and government procurement. As 26 British companies announce new investments in India, the agreement is set to spur innovation, boost capital flows, and improve market access for businesses on both sides.
India’s exports to the UK grew by 12.6% in 2024–25, reaching $14.5 billion, while imports rose by 2.3% to $8.6 billion. Total trade volume hit $21.3 billion in 2023–24, up from $20.4 billion in the previous year.
A New Chapter in India UK Relations
This milestone FTA marks a major stride toward economic integration, growth, and shared prosperity for both nations. Businesses across sectors are set to benefit—and the long-term impact will likely transform the landscape of India–UK trade for years to come.
How do you see this FTA impacting your business or sector? Let us know in the comments!
Courtesy: ndtv.com, indiatimes.com
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