India and the United Kingdom (UK) on Thursday signed a landmark Free Trade Agreement (FTA) that will cut tariffs on British whisky, cars and an array of items, besides boosting bilateral trade by around $34 billion annually.
The deal was signed by Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynold in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer. Under the FTA, 99 per cent of Indian exports will face zero duties in the UK. In return, Britain’s exports to India will see a 90 per cent cut in duties, with most goods becoming fully tariff-free within a decade.
The UK said Indian consumers will benefit from improved access to the best British products — from soft drinks and cosmetics to cars and medical devices — as average tariffs will drop from 15 per cent to 3 per cent after the FTA kicks in. The UK already imports 11 billion pounds in goods from India but liberalised tariffs on Indian goods will make it easier and cheaper for British consumers and businesses to buy Indian products and boost Indian businesses’ exports to the UK, it said in a statement.
The trade deal will provide duty-free access to several domestic sectors such as leather, electrical machinery and chemicals in the British market, thus unlocking nearly $23 billion in opportunities, Commerce and Industry Minister Piyush Goyal said. “Duty-free access for about 99 per cent of Indian exports unlocks nearly $23 billion in opportunities for labour-intensive sectors, marking a new era for inclusive and gender-equitable growth,” said Goyal.
Goyal also said that India’s talent in IT, services, and education will gain from easier access to the UK’s high-value markets. India’s exports to the UK rose by 12.6 per cent to $14.5 billion, while imports grew by 2.3 per cent to $8.6 billion in 2024-25. The bilateral trade increased to $21.34 billion in 2023-24 from $20.36 billion in 2022-23.
Deal for all sectors
The trade deal, firmed up after three years of negotiations, is expected to ensure comprehensive market access for Indian goods across all sectors, including in the agricultural domain. The deal offers a transformative opportunity for business across key sectors such as agriculture, food processing, chemicals, pharmaceuticals, textiles, engineering goods, electronics, and marine products.. Artisans, weavers, and daily-wage labourers employed in several MSMEs across textiles, leather, footwear, gems and jewellery, toys, and marine products will step into a new phase of prosperity. The trade agreement will also enhance market access, spur investment and create more jobs in the garment sector.
Agriculture and pharma
India has protected the interest of domestic farmers by excluding dairy products, edible oils and apples in the FTA while securing zero duties on 95 per cent of agriculture and processed food items. No tariff concession has been allowed on oats as well in the FTA. In agriculture, the UK imports $37.52 billion worth products, but imports from India are just $811 million.
“India’s farmers are poised to be the biggest winners of the FTA, which unlocks premium UK markets for their produce, matching or exceeding the benefits already enjoyed by exporters from Germany, the Netherlands, and other EU nations,” a commerce ministry official said.
More than 95 per cent of agricultural and processed food tariff lines will attract zero duties on fruits, vegetables, cereals; pickles, spice mixes, fruit pulps; and ready-to-eat meals and processed foods. The UK is a high-value market for niche Indian agri-products such as tea, mangoes, grapes, spices, marine products, etc.
India’s exports of generic medicines and medical devices, such as X-ray systems and surgical instruments, will get a major boost with Britain agreeing on zero duty under the free trade agreement.
“Significant share of medical devices like surgical instruments, diagnostic equipments, ECG machines, X-Ray systems will not attract any duty,” according to a commerce ministry official. This will reduce costs for Indian med-tech companies and make their products more competitive in the UK market.
Energy cooperation
The FTA will pave the way for increased collaboration and investment in the energy sector, including in renewables, according to Kartikeya Dube, Head of Country and Chairman bp India. “This will only enhance easier trade of goods and services but will also enable a seamless flow of talent and expertise,” Dube said. “In the energy sector, this will encourage collaborations and investments including renewables.”
Significant milestone: Modi
PM Modi lauded the signing of the landmark India-UK FTA, stating that the deal marked a significant milestone in bilateral relations. During a joint press statement with UK PM Starmer, PM Modi highlighted the enhanced market access and economic opportunities for both nations. “Today marks a historic day in our bilateral relationship. I am pleased to note that, after many years of hard work, the Comprehensive Economic and Trade Agreement has been concluded,” PM Modi said. “This agreement not only paves the way for economic partnership but also serves as a blueprint for our shared prosperity.” PM Modi said India and the UK are also firming up the “Vision 2035” roadmap to give new momentum and energy to the comprehensive strategic partnership between the two sides in the next decade.
Biggest trade deal: Starmer
UK PM Starmer said that the UK-India FTA is the biggest trade deal since the UK left the European Union. Starmer in a joint press meeting with PM Modi thanked him for his leadership and pragmatism. “We both know, this is the biggest and the most significant trade deal that the UK has made since leaving the EU. I think I can say this is the most comprehensive deal that India has ever done. So thank you Prime Minister for your leadership and your pragmatism. I’d like to thank everybody who has worked so hard to get this deal over the line,” Starmer said. The UK PM said that the deal is set to boost wages and improve the living standards across the UK and cut tariffs on Indian goods.
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