Resetting trade ties, India and the United Kingdom are set to sign a Free Trade Agreement (FTA) on Thursday, which will potentially increase two-way trade by billions of dollars annually.
Close to 90 % of UK exports especially aerospace, spirits like scotch whisky, cosmetics, salmon, chocolates, biscuits and medical devices would be cheaper in India after the India-UK Free Trade Agreement (FTA).
Prime Minister Narendra Modi will witness the signing of the FTA.
In a statement before leaving for the UK, PM Modi said a meeting with his counterpart Keir Starmer will provide an opportunity to further enhance economic partnership, aimed at fostering prosperity, growth and jobs creation in both countries.
“India and UK share a Comprehensive Strategic Partnership that has witnessed significant progress in recent years. Our collaboration spans a wide range of sectors, including trade, investment, technology, innovation, defence, education, research, sustainability, health and people-to-people ties.
“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 jobs creation in both countries. I also look forward to calling on His Majesty King Charles III during the visit,” PM Modi said
India-UK trade
The India-UK bilateral trade crossed record $ 55 billion in 2024 and is expected to reach $ 100 Billion in five year, the FTA would result in changes in trade.
“Tariff on scotch whisky and gin would come down from 150% to 75% immediately and to 40% over 10 years. Tariffs on UK-made cars, currently exceeding 100%, will be reduced to 10%, allowing British cars like Jaguar to explore the Indian market.
“Close to 99 % of India exports to the UK would be covered under the FTA that is expected to boost textiles, footwear, auto components, gems, jewellery, furniture, sports goods, chemicals, and machinery. Some of these goods presently face tariffs between 4% and 16% in the UK,” according to those in know of the development
Over 1,000 Indian companies currently operate in the UK, employing more than 1 lakh people and having a collective turnover of over $ 91 billion.
There are about 700 British companies in India with a total turnover of US $59 billion employing over 5 lakh people.
Indian companies have invested around $20 billion (Rs 1.73 lakh crore).
The UK has invested close to $36 billion (Rs 3.11 lakh crore) in India, making it the sixth-largest foreign investor.
An official assessment of the UK Government says the FTA “will increase GDP by £4.8 billion and UK wages by £2.2 billion each and every year in the long run. Bilateral trade is also expected to increase by £25.5 billion each and every year in the long run”.
During his London visit, PM Modi will also interact with Indian and British business delegations to push for greater trade between the two countries.
The FTA includes a ‘youth mobility scheme’ allowing 3,000 young professionals from each country to live and work abroad for up to two years.
On Tuesday night, the Union Cabinet led by PM Modi okayed the text of the FTA after legal teams sifted through the terms and gave it a final ‘legal scrubbing’.
Foreign Secretary Vikram Misri said “there is the obvious legal scrubbing, for any such agreement needs to go through. We are continuing to work on those and last-minute work on that is continuing”.
The FTA was announced on May 6 after Modi-Starmer had a telephonic talk.
