The newly signed India–UK Free Trade Agreement marks a major breakthrough in bilateral economic relations, with India gaining substantial benefits in the food, footwear, and textile sectors. According to The Indian Express, the deal, finalized after over two years of negotiations, also paves the way for lower tariffs on British automobiles and liquor entering the Indian market. As both nations seek to deepen post-Brexit economic ties, this pact is being hailed as one of the most comprehensive trade frameworks in recent times.
What India Gains from the Deal
Under the agreement, nearly 99% of Indian goods will now receive duty-free access to the UK. This includes a wide range of sectors such as textiles, footwear, marine products, gems and jewellery, pharmaceuticals, chemicals, auto components, and machinery. For India’s labor-intensive export industries, especially in states like Tamil Nadu, Gujarat, and Punjab, this development is a major boost.
Indian textile and clothing exports, which previously faced duties ranging from 8% to 16% in the UK, will now enjoy zero-duty access. This will greatly benefit textile hubs like Tiruppur, Ludhiana, and Surat. The footwear industry is another big winner. Manufacturers in Agra, Kanpur, and Chennai, who have long been affected by import duties, will now find British markets more accessible.
India has also secured zero-duty access for several food items, including seafood, dairy products, pulses, meat, and spices, many of which earlier faced steep import tariffs of over 20% or more. This development is expected to significantly enhance India’s competitiveness in the UK market across multiple categories.
UK Benefits: Autos, Alcohol, and Procurement
On the British side, the deal offers phased tariff reductions for sectors where the UK has strong interests. For example, import duties on luxury cars and high-end vehicles will be brought down from over 100% to 10% over a span of years, within a capped quota. This makes British-made cars more affordable for India’s luxury market, without exposing the domestic auto industry to large-scale disruption.
The liquor industry also sees a major breakthrough. Duties on imported spirits like whisky, gin, vodka, and rum, which previously stood at 150%, will be reduced to 75% in the first year and further lowered to 40% over the next decade. However, minimum import price conditions will apply to prevent market flooding and safeguard domestic producers.
Additionally, UK firms will be allowed access to India’s government procurement market. This means British companies can now participate in public sector tenders, especially in areas like clean energy, railways, and urban infrastructure, under more relaxed local-content norms.
A critical provision of the agreement is the Social Security pact, which exempts Indian professionals temporarily posted in the UK from making dual social security contributions. This move is expected to save Indian companies and professionals nearly ₹4,000 crore annually.
Economic and Strategic Implications
The trade pact is expected to double India–UK bilateral trade to $112 billion by 2030. For the UK, it is projected to bring in £25.5 billion in trade gains and add £4.8 billion to GDP annually. For India, the deal strengthens its position in global supply chains and unlocks new export opportunities, particularly for MSMEs.
The agreement was signed in the presence of Prime Ministers Narendra Modi and Keir Starmer, underlining its strategic importance. It also marks India’s first comprehensive trade deal with a European country in the post-Brexit landscape.
What’s Excluded: Safeguards and Sensitive Sectors
Despite the sweeping liberalization, certain sensitive areas have been kept out of the agreement. Indian sectors like dairy, edible oils, and apples remain protected under the exclusion list to shield small farmers and domestic producers. The auto and liquor concessions have also been designed carefully, with phased implementation and volume caps.
This calibrated approach ensures that India does not compromise its domestic interests while expanding global market access. The balanced nature of the agreement is being appreciated across trade policy circles for being both ambitious and protective.
Why This Deal Matters for India
The India–UK FTA aligns closely with India’s “Make in India” initiative by promoting job creation and export competitiveness. It opens up new channels of trade for Indian MSMEs and sets a benchmark for future trade negotiations with the EU, US, and other advanced economies.
It also reaffirms India’s growing confidence in shaping global trade norms. By securing favorable terms in areas like food processing, footwear, garments, and pharmaceuticals, the country has taken a significant step toward becoming a global manufacturing and export powerhouse.
Photo Credit: HT
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