
India UK trade deal 2025: In a meaningful development towards enhancing their economic relationship, India and the UK are set to conclude a long-awaited Free Trade Agreement (FTA). It was during Prime Minister Narendra Modi’s visit to the UK, along with Commerce Minister Piyush Goyal, after three years of extensive and complicated negotiations.
The agreement, which was concluded in May, has substantial implications for trade, investment, and mobility of labor between the two countries. Here’s how the various sectors are expected to benefit. Some are labelling as an important moment in the recent developments on trade and global trade.
Size and Significance of the Trading Relationship
India and the UK have a strong economic partnership and together account for combined trade of over $50 billion. The UK is India’s sixth largest foreign investor with more than 1,000 Indian companies operating in Britain and providing jobs for over 100,000 people. In fact, Foreign Secretary Vikram Misri indicated that these companies have invested close to $20 billion into the UK.
The FTA aims to further enhance the economic engagement in the two countries. It will be by lowering or eliminating tariffs. Also, increasing market access and facilitating the mobility of professionals.
Major Benefits for Indian Exporters
Duty-Free Exports
The commerce ministry of India states that 99% of exports to the United Kingdom will be free of import tariffs. Key categories expected to benefit include:
Textiles & Apparel: Companies like Raymond, Arvind, Welspun India, and Vardhman will benefit from duty-free entry.
Footwear: Companies in India, like Bata and Relaxo, have the opportunity to expand significantly in the UK.
Gems & Jewellery: Exporters of high-value goods, like diamonds and gold jewellery, will benefit from reduced hurdles.
Engineering and Auto Parts
Things like automotive components, which have an existing duty of 4-16%. It will now be reduced to zero, providing a competitive advantage to Indian engineering exporters.
Benefits for the UK: Cars, Whisky, and Deals
High-End Car Market
India has agreed to reduce tariffs on UK-made cars from 100% to 10% (they will implement this through some sort of quota system). Premium manufacturers such as Aston Martin, and Jaguar Land Rover (owned by Tata Motors), will be the biggest gainers.
Access to Scotch Whisky
The biggest win for UK distillers is that tariffs on Scotch whisky will be reduced from 150% to 75% immediately. Gradually phased out to 40% over ten years.
Diageo, a major global beverage company with brands like Johnnie Walker, is likely to see a large increase in exports to India.
Government Purchases
India has agreed to make non-sensitive government tenders up to ₹2 billion (~£19 million) open to UK suppliers. This is a step in the direction of making UK companies more transparent and providing opportunities.
Increase in Electric Vehicle (EV) Sector
Also, Under the agreement India will allow Indian electric vehicle manufacturers like Tata Motors and Mahindra Electric to enter the UK market. This will be under a quota arrangement. In exchange for reduced car import duties, the UK will provide India with increased access to trade on electric and hybrid vehicles as India works towards global sustainability goals.
Mobility and Employment: Simple Visas and Social Security Exemptions
In an action that is expected to benefit many talented professionals, the UK will offer:
A streamlined short-term visa pathway for business visitors from India. This included yoga instructors, cooks, and artists.
Social security exemptions for Indian workers with temporary employment in the UK for three years. This will reduce the financial burden to the employee and employe.
Political and Strategic Implications
Furthermore, PM Modi’s visit marks his fourth trip to the UK since he took office in 2014. His first since the reconciliation and joint discussion with UK Prime Minister Keir Starmer at G7 held in Canada. The leaders are also expected to continue discussing joint collaboration on security, energy, healthcare and education.
Former diplomat, Mahesh Sachdev pointed out the generally accepted overall significance, “The most important part of the visit is signing the bilateral free trade agreement,” which he views as the basis of the evolving relationship two countries.
An Assurement of Business
Ajay Sahai, Director General, Federation of Indian Export Organisations (FIEO), highlighted the significance of the FTA and discussed its use in facilitating Indian entry into important industries in the UK (such as textiles, marine, and engineering goods).
With latest news on business occupation encouraging global collaboration and free trade, the India-UK FTA will set a rhythm for future international commercial agreements, likely opening billions of opportunities for cross-border development in various sectors. Once this understanding is accepted by the British Parliament—anticipated within a year—the agreement will take effect, and a new chapter in Indo-British commercial engagement will commence.
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