India-UK Free Trade Agreement Set to Recast Bilateral Trade

In a landmark moment for global trade diplomacy, India and the United Kingdom are poised to sign the long-awaited India-UK Free Trade Agreement on Thursday, during Prime Minister Narendra Modi’s high-profile visit to London. The historic pact is expected to reshape bilateral trade dynamics, bringing significant economic gains to both nations.

Arriving in London on Wednesday evening, PM Modi was welcomed by jubilant members of the Indian diaspora, British parliamentarians, students, and business leaders gathered in anticipation of what is being hailed as a “transformative moment” in India-UK relations.

India-UK Free Trade Agreement: A Trade Deal Rooted in Opportunity

The India-UK Free Trade Agreement is the result of years of negotiation aimed at unlocking new pathways for commerce, collaboration, and cultural exchange. The agreement is expected to cut costs for exporters and importers alike, with sweeping tariff reductions on both sides.

According to sources close to the negotiation, India will slash tariffs on nearly 90% of UK goods. This includes:

• Whisky and gin duties were reduced from a whopping 150% to 75% immediately, then down to 40% over the next decade.

• Automobile tariffs, currently above 100%, will fall to just 10% under a defined quota.

• Tariffs on British salmon, biscuits, medical devices, cosmetics, and chocolates will be eased considerably.

Meanwhile, the UK has committed to offering duty-free access to 99% of Indian exports, a move that covers nearly the entirety of the current trade volume. This is expected to benefit Indian producers of leather goods, footwear, textiles, gems and jewellery, machinery, auto parts, sports equipment, and chemicals—sectors that have long faced duty barriers of up to 16%.

Economic Boost for Both Nations

The trade pact is strategically designed to double bilateral trade to $120 billion by 2030, creating jobs, encouraging innovation, and promoting investment flows between two of the world’s largest democracies.

“This deal is more than just numbers; it’s about deepening trust and expanding the bridge of opportunity between our people,” said PM Modi in a statement before he departs from New Delhi. “During my meeting with Prime Minister Rt Hon Sir Keir Starmer, we will have the opportunity to further enhance our economic partnership, aimed at fostering prosperity, growth, and job creation in both countries.”

The UK government, on its part, sees this agreement as a gateway to the wider Indo-Pacific market and a vital post-Brexit success story.

India-UK Free Trade Agreement: Social and Strategic Gains

Beyond trade, the agreement brings a range of social and economic benefits:

• Indian professionals, including yoga instructors, chefs, and musicians, will gain streamlined access to short-term work opportunities in the UK.

• Indian workers and their employers will be exempt from social security contributions in the UK for up to three years—a measure expected to save Indian businesses approximately ₹40 billion ($463 million) annually.

• British suppliers will now be allowed to bid for Indian federal government procurement tenders worth over ₹2 billion, offering UK businesses access to a public procurement market valued at £38 billion a year.

This level of cooperation also sets the stage for deeper partnerships in education, healthcare, defence, science, and technology.

Diaspora Celebrates Historic Ties

The Indian diaspora, which makes up 2.7% of the UK population, is playing a celebratory and symbolic role in welcoming PM Modi and marking the occasion. For many, the India-UK Free Trade Agreement represents not just economic collaboration, but also a reaffirmation of a centuries-old relationship—redefined through mutual respect and modern partnership.

Foreign Secretary Vinay Kwatra emphasized that “people-to-people contacts form a key pillar of growth.” Veteran diplomat Mahesh Sachdev added, “We are at a different time now—independent and strong—enabling both sides to reap early harvests of economic integration.”

Community events are being organized across London, with cultural showcases, academic discussions, and networking forums underlining the significance of this new era.

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