London, UK – In a landmark move hailed as a post-Brexit triumph, the United Kingdom and India have formally sealed a historic Free Trade Agreement (FTA) expected to reshape economic relations between the two nations and significantly boost trade volumes in the coming years.
Dubbed the most comprehensive bilateral trade deal for both countries in recent times, the pact is projected to increase trade by £25.5 billion annually by 2040 and inject £4.8 billion into the UK economy alone.
Key components of the deal include dramatic tariff cuts that promise to benefit major industries on both sides. British exports such as Scotch whisky, gin, automobiles, aerospace components, medical devices, and biscuits will enjoy substantial duty reductions. Notably, alcohol tariffs will be slashed from 150% to 75%, with a further step-down to 40% over the next decade. Car tariffs will also drop from more than 100% to just 10%.
In return, 99% of Indian exports to the UK — including textiles, jewellery, leather goods, marine products, and processed foods — will become duty-free, a major boon for India’s labour-intensive sectors.
The FTA goes beyond goods. It includes new provisions for services and professional mobility, enabling smoother pathways for Indian IT specialists, healthcare professionals, and consultants seeking to work in the UK.
A standout provision is a bilateral social security agreement that exempts temporary Indian workers from paying UK National Insurance contributions for up to three years, and vice versa. This move has, however, sparked debate in British circles, with critics warning of a “two-tier” system for taxpayers.
Despite the celebratory tone, the deal isn’t without hurdles. Concerns persist around the UK’s non-tariff barriers — including product standards and sustainability regulations — that could still pose challenges for Indian exporters.
Environmental clauses, particularly around the UK’s proposed carbon border adjustment mechanism, may also impact Indian industries such as steel and textiles, raising calls for clarity in implementation.
“This is the biggest deal the UK has done since we left the EU,” Keir Starmer Prime Minister of UK told P M Modi during a call, calling the moment a “truly historic” one. Modi responded by praising Starmer’s leadership, saying the agreement would make the strategic partnership between the two countries even stronger.
This deal follows over three years of intense negotiations and underscores both nations’ strategic intent to deepen ties in a shifting global trade landscape.
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