📌 Introduction
After over three years of negotiations, India and the United Kingdom have finalized a landmark Free Trade Agreement (FTA) on May 6, 2025. This agreement is poised to significantly enhance economic ties between the two nations, aiming to double bilateral trade to $120 billion by 2030.
🔍 Key Highlights of the Agreement
- Tariff Eliminations: The FTA eliminates import duties on 99% of Indian goods entering the UK, covering nearly 100% of trade value.
- UK Export Benefits: India will reduce tariffs on 90% of UK goods, including significant cuts on products like whisky, gin, and cars.
- Economic Impact: The agreement is expected to boost the UK economy by £4.8 billion annually by 2040.
🏭 Sectoral Impacts
For India:
- Textiles and Apparel: Indian exporters will benefit from duty-free access to the UK market, enhancing competitiveness.
- Agriculture and Food Products: Elimination of tariffs will open new avenues for Indian farmers and food processors.
- IT and Services: The agreement facilitates greater access for Indian IT firms and professionals in the UK market.
For the UK:
- Spirits and Beverages: Tariffs on British whisky and gin will be reduced from 150% to 75%, with plans to further decrease to 40% over the next decade.
- Automotive Sector: Tariffs on UK-made cars exported to India will drop from 100% to 10%, benefiting manufacturers like Jaguar Land Rover.
- Cosmetics and Medical Devices: British exporters in these sectors will gain improved market access in India.
👥 Mobility and Workforce Provisions
A notable feature of the FTA is the exemption from national insurance contributions for Indian professionals temporarily working in the UK for up to three years. This measure aims to reduce costs for Indian companies operating in the UK and is part of the Double Contributions Convention.
🌐 Strategic Significance
This FTA marks the UK’s most significant trade deal since Brexit, reflecting its strategy to strengthen ties with emerging economies. For India, it represents a step towards diversifying its trade partnerships and enhancing its global economic footprint.
