India, UK Ink Long-Awaited FTA: Tariff Cuts, Market Access, And $6 Billion In New Investment

India, UK Ink Long-Awaited FTA: Tariff Cuts, Market Access, And $6 Billion In New Investment

The FTA will see a drop in tariffs from both nations. Figures released by the Commerce Ministry stated that the agreement has ensured duty free access to 99% of Indian exports unlocking $23 bn in opportunities for labour intensive sectors.

Ashwin AhmadUpdated: Friday, July 25, 2025, 10:33 AM IST
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Prime Minister Modi signed the long-awaited FTA - officially known as the Comprehensive Economic and Trade Agreement - with his British counterpart Keir Starmer in London on Thursday. | X @narendramodi

New Delhi: Prime Minister Modi signed the long-awaited FTA - officially known as the Comprehensive Economic and Trade Agreement - with his British counterpart Keir Starmer in London on Thursday. Government officials stated negotiations for the agreement that began three years ago would see a doubling of bilateral trade to $120 billion by 2030 and also unprecedented access into each other’s markets.

Speaking at a joint press conference with Starmer, PM Modi stated today marked a “historic day in our bilateral agreements.” Describing the agreement as a “blueprint for our shared prosperity,” he said the trade deal also had global ramifications. “Agreements reached between two democracies and two of the world's major economies will lend support to global stability and prosperity,” he said.

The FTA will see a drop in tariffs from both nations. Figures released by the Commerce Ministry stated that the agreement has ensured duty free access to 99% of Indian exports unlocking $23 bn in opportunities for labour intensive sectors.

Taking to X, Commerce Minister Piyush Goyal wrote that “this agreement is a big win for farmers, ensuring duty-free exports on nearly 95% of agricultural products, while fisherfolk gain from Zero Duty on 99% of marine exports, boosting their incomes.”

The minister added the deal would have a transformative impact on manufacturing-intensive sectors like engineering goods, electronics, pharma, chemicals, food processing, and plastics,” while providing Indian consumers high-quality goods at competitive prices.

From the UK’s side, the FTA is also being seen as a win. A British government statement said the FTA ensured India’s tariffs on UK goods have fallen from 15% to 3%. Tariffs on individual goods such as whisky have been slashed from 150% to 75% with immediate effect that drops to 40% after 10 years. Tariffs have been lowered on UK cars from 100% to 10% ensuring models like Jaguar Land Rover (JLR) Rolls Royce and Aston Martin will become much cheaper. The changes should give the UK an edge over its competitors in targeting India’s luxury market.

British Prime Minister Sir Keir Starmer said the “landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change.” The statement added that the UK would welcome nearly Euro 6 billion in new investment that would create over 2,200 British jobs across the country.

While industry bodies both in India and the UK have voiced their approval, they will feel the need to remain cautious. The announcement of the FTA does not mean that its provisions will come into effect immediately. The agreement will be scrutinised by both the Indian and British Parliaments and its adoption is expected only by mid-2026.

The other issue to consider here is local laws. The alcohol industry in India is subject to state taxes that could nullify the benefit of reduced import duties. For cars, the government will have to specify what categories of cars come under the tariff exemption, what happens to cars already ‘Made in India’ and do other categories like EV cars qualify.

FTA aside, Modi thanked Starmer for the UK’s condemnation of the Pahalagam attack. “We are united in the belief that there is no place for double standards in the fight against terrorism. We agree the forces which espouse extremist ideologies should not be allowed to misuse democratic freedoms.”

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