UK, India Free Trade Agreement – Key Points

India recently signed a Free Trade Agreement (FTA) with United Kingdom. Negotiations over this FTA extended for over three years. The FTA reduces a number of tariff and non-tariff barriers in the trade between the two countries. It covers both goods and services.

Tariffs on almost 99% of goods that India exports to UK will be eliminated after this FTA. This will make Indian exports to UK cheaper for the consumers in UK. This in turn will raise demand for Indian exports in UK.

Indian Exports to UK Will Get a Boost

Some of the key Indian sectors that will benefit from this FTA include textiles, leather, marine products, toys, engineering products, auto parts, chemicals etc. The positive boost that these sectors will get from the FTA is expected to generate significant employment in these sectors in India.

The FTA will make it easier for Indians working in the services sector such as IT/ITeS, financial services, business services etc to get work visas and work permit in UK. This is expected to give a boost to India’s export of services to UK. UK is a major global financial & digital services hub.

India’s Services Exports to UK Will Benefit

The FTA exempts Indian workers who are living temporarily in UK and their employers from paying social security contributions in UK for a period of 3 years. This exemption will lower the cost for Indian companies sending their workers to work in UK. This in turn will make them more competitive.

India will Reduce Tariffs on British goods

India will reduce tariffs on 90% of British goods that are imported in India. 85% of these goods will have zero tariffs imposed by India in the next 10 years.

• Tariff on whiskey and gin imports from Britain will be reduced to 75% from 150%. By the end of the next decade, this will be reduced further to 40%.  India is the world’s largest whiskey market. With reduction of these duties, Indian consumers will enjoy cheaper whiskies from UK, such as scotch whiskey.
• Tariffs on British automotive products will also be lowered from 100% to 10%. Other British products such as cosmetic products, aerospace products, chocolates, biscuits etc, will also become cheaper for Indian consumers.
• The FTA will allow British businesses to participate in India’s procurement market. They will get preferential treatment under Indian government’s Make in India initiative. British businesses can participate in tenders for procurement of various goods by Indian government.
• FTA expected to give significant boost to trade between the two countries
• The FTA is expected to increase the total trade between the two countries by $34.13 billion(GBP 25.5 billion) by the year 2040. Total trade between UK and India stood at GBP 42.6 billion in 2024. Total exports of UK to India in the year stood at GBP 17.1 billion. Total exports of India to UK in the year stood at GBP 25.5 billion.

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Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2127321