The India-UK Free Trade Agreement (FTA), finalized on May 6, 2025, after three years of negotiations, is a significant agreement designed to boost economic ties between the two nations .
Key points of the agreement:
- Boost to Bilateral Trade: The FTA is expected to increase bilateral trade by £25.5 billion . It is also projected to increase the UK’s GDP by £4.8 billion and boost wages by £2.2 billion each year in the long term .
- Tariff Reductions: India will eliminate tariffs on 99% of its tariff lines and reduce tariffs on 90% of UK tariff lines . Tariffs on 85% of these lines are set to become fully tariff-free within a decade .
- Benefits to UK Industries: The agreement benefits the British alcohol and car industries, with tariffs on whisky and gin getting halved to 75% and then reducing to 40% by the tenth year of the deal . Automotive tariffs will decrease from over 100% to 10% under a quota . Other UK exports that will see reduced tariffs include cosmetics, medical devices, and aerospace parts .
- Opportunities for Indian Exports: 99% of Indian exports will face no import duty under the deal . Sectors such as textiles, marine products, leather, and engineering goods stand to gain .
- Professional Mobility: The agreement streamlines visa procedures and ensures that Indian workers temporarily in the UK are exempt from social security contributions for up to three years, and vice versa . This is similar to the UK’s Social Security Agreements with countries like Switzerland, Norway, and Canada .
- Government Procurement: UK businesses will gain unprecedented access to India’s public procurement market, which comprises approximately 40,000 tenders with a value of at least £38 billion a year .
- Dispute settlement: The agreement establishes a robust state-to-state dispute settlement mechanism for resolving disputes .
- Other Considerations: Advanced negotiations on a separate bilateral investment treaty and further discussions on labor and environmental standards are ongoing . Overall, the India-UK FTA 2025 is viewed as a transformative agreement that will enhance economic growth, create jobs, and strengthen the partnership between the two countries .
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