India-UK Free Trade Agreement Set for Signing Next Week: A Major Boost to Bilateral Trade
India and the United Kingdom are on the brink of a historic economic milestone, with their long-awaited Free Trade Agreement (FTA) likely to be signed next week. With the legal text finalized, the deal aims to double bilateral trade to $120 billion by 2030, significantly reducing tariffs and enhancing mobility for professionals.
PM Modi’s Possible Visit to London
Sources indicate that Prime Minister Narendra Modi may travel to the UK to witness the signing ceremony. While his visit is not officially confirmed yet, the move signals the high-level importance both nations place on this agreement.
FTA Ratification Process
Once signed, the FTA will be made public and undergo ratification:
- In India: The Cabinet will review and approve the agreement.
- In the UK: Parliamentary ratification is required, which could take up to a year.
This timeline suggests that the FTA may come into force sometime in late 2026 or early 2027.
Key Highlights of the India-UK FTA
- Tariff Reductions & Market Access
- India will remove or reduce tariffs on 90% of tariff lines, covering 92% of UK imports.
- The UK will eliminate tariffs on 99% of Indian exports, greatly benefiting Indian manufacturers.
- Boost to Indian Exports
The FTA eliminates or reduces duties on Indian labour-intensive exports, including:
- Leather goods
- Footwear
- Textiles and garments
This will make Indian products more competitive in the UK market.
- Cheaper Imports from the UK
Indian consumers can expect lower prices on:
- Whisky & gin (duties will fall from 150% to 75% immediately, and to 40% over 10 years)
- Automobiles (tariffs to drop from 100% to 10% for a limited number of vehicles)
Tariff cuts will also extend to electric vehicles (EVs) and hybrids on a quota basis.
Professional Mobility: A Win for Skilled Workers
The FTA introduces eased mobility for professionals, including:
- Business visitors
- Contractual service suppliers
- Intra-corporate transferees and their families (with right to work)
- Independent professionals like yoga instructors, musicians, and chefs
This opens new avenues for skilled Indian professionals seeking opportunities in the UK.
Services, Investment & Government Procurement
- India will grant national treatment to UK service providers in sectors like telecom, environment, and construction.
- A firm commitment to 74% Foreign Direct Investment (FDI) in banking and insurance is included, protecting UK companies from future regulatory shifts.
- The UK gains access to Indian government procurement, allowing UK firms to bid on select public contracts.
Exclusions & Sensitive Sectors
Certain domestic sectors have been excluded from liberalisation to protect local interests:
- Sugar
- Milled rice
- Pork
- Chicken
- Eggs
Social Security Agreement (DCC)
Alongside the FTA, both countries have agreed to a Double Contributions Convention (DCC). This will:
- Prevent double social security contributions for employees and employers operating in both countries.
- Allow temporary workers (up to 3 years) to continue contributing to their home country’s social security, preventing gaps in coverage.
Bilateral Investment Treaty in Progress
India and the UK are also working to finalise a Bilateral Investment Treaty (BIT), expected to complement the FTA by offering stronger protection to cross-border investors.
Conclusion
The India-UK Free Trade Agreement marks a transformative step in bilateral relations. It is designed to:
- Accelerate trade
- Ease professional movement
- Encourage investment
- Support startups and innovators
If all goes as planned, this FTA could redefine India-UK economic ties and set a new benchmark for global trade partnerships in the coming decade.
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