New Delhi: India and the United Kingdom are poised to sign a landmark Free Trade Agreement (FTA) during Prime Minister Narendra Modi’s visit to the UK, marking a major milestone in bilateral economic ties after nearly three years of negotiations. This FTA, India’s first significant trade pact with a developed country in over a decade, is expected to come into force within a year, pending legal approvals from the British Parliament and India’s Union Cabinet.
Under the agreement, India has offered several key concessions. Import duties on Scotch whisky and gin will be reduced from the current 150% to 75% immediately, with a further cut to 40% over the next ten years. Tariffs on UK-manufactured automobiles, which currently exceed 100%, will be slashed to 10% under a quota-based system. Additionally, India will lower duties on a variety of UK products, including cosmetics, salmon, chocolates, biscuits, and medical devices.
In return, the UK will provide duty-free access to 99% of Indian exports, covering nearly the entire current value of India’s trade with Britain. This is expected to be a major win for several Indian sectors such as textiles, footwear, auto components, gems and jewellery, furniture, sports goods, chemicals, and machinery, which currently face UK tariffs ranging from 4% to 16%. Indian manufacturers of electric and hybrid vehicles will also gain preferential access to the UK market under a new quota regime.
Several Indian firms are set to benefit from this trade deal, including Welspun India and Arvind Ltd in the textiles sector, Bata India and Relaxo in footwear, Tata Motors and Mahindra Electric in the automobile and EV segments, and Bharat Forge in engineering and components. On the UK side, the government projects that the FTA could boost its GDP by £4.8 billion (approximately ₹56,150 crore) annually in the long term. British consumers can expect lower prices on Indian-made garments, shoes, and food products, while UK firms like Diageo (Scotch whisky) and luxury carmakers such as Aston Martin and Jaguar Land Rover (a Tata Motors subsidiary) will gain greater access to India’s expanding consumer market.
The agreement also includes progressive measures in services and mobility. The UK will grant short-term entry to Indian yoga instructors, chefs, musicians, and other contractual service providers. Furthermore, Indian professionals posted in the UK for up to three years will be exempt from contributing to the UK’s social security system, potentially saving Indian firms nearly ₹4,000 crore annually. UK companies will also be allowed to bid on non-sensitive federal government procurement tenders in India valued above ₹2 billion, opening access to nearly 40,000 tenders worth over ₹4.09 lakh crore annually.
The FTA is also expected to enhance bilateral investment flows. More than 1,000 Indian companies currently operate in the UK, employing over 1 lakh people and investing around $20 billion (₹1.73 lakh crore). Meanwhile, the UK has invested close to $36 billion (₹3.11 lakh crore) in India, making it the sixth-largest foreign investor in the country.
During his fourth visit to the UK since 2014, Prime Minister Modi will hold talks with British Prime Minister Keir Starmer on a broad range of issues including trade, energy cooperation, healthcare, education, and security. Following the UK leg of his tour, the Prime Minister is scheduled to visit the Maldives on July 25.
