July 18, 2025
NEW DELHI – India and the United Kingdom are likely to sign a Free Trade Agreement (FTA) next week, and this is expected to eliminate import taxes on nearly 99 per cent of Indian exports to the UK, reports said.
The agreement has been under negotiation for several months and was finalised in May. It aims to ease tariffs and increase investment between the two countries.
The FTA will eliminate taxes on labour-intensive goods such as leather, footwear, and clothing. In return, India will reduce tariffs on high-value British imports like whisky and luxury cars.
India will gradually lower import duties on British whisky from 150 per cent to 40 per cent over a 10-year period. Taxes on imported cars from the UK will also drop – currently over 100 per cent, they are set to come down to just 10 per cent.
Both India and the UK hope this FTA will double bilateral trade to USD 120 billion by 2030. Apart from goods, the deal is expected to encourage investment, enhance professional mobility, and improve access to tech services.
The FTA is a cornerstone of post-Brexit UK trade strategy, aligning with India’s aim to diversify trade beyond the Regional Comprehensive Economic Partnership (RCEP). It serves as a platform for future cooperation in technology, defence, education, tourism, and Indian diaspora engagement.
After signing, the deal won’t be implemented immediately. It will need formal approval from the British Parliament and India’s Cabinet, a process that could take up to a year.
Notably, the formal negotiations for the FTA began in January 2022, with both countries expressing optimism and targeting a deal by Diwali 2022.
However, talks extended well beyond that deadline due to complexities around key issues. India pushed for greater market access for its goods—especially textiles, gems and jewelry, leather, and engineering products—while the UK sought tariff reductions on items such as Scotch whisky, luxury cars, and certain food items.