Mumbai, July 23, 2025 – In a landmark move to strengthen economic ties, India and the United Kingdom signed a historic Free Trade Agreement (FTA) during Prime Minister Narendra Modi’s official visit to London. This long-awaited pact — three years in the making — brings major tariff reductions on a range of goods, including Scotch whisky, electric vehicles (EVs), passenger cars, textiles, footwear, and marine products, paving the way for a new era in bilateral trade.

Key Tariff Reductions and Market Access

As per the agreement:

• Tariffs on Scotch whisky will be slashed from 150% to 75% immediately, with a further phased reduction to 40% over the next 10 years.

• Automobile duties, currently at 100%, will be reduced to 10% for a limited quota of British cars, a threshold that will be gradually liberalized.

• In return, Indian electric and hybrid vehicle manufacturers will gain preferential access to the UK market under a similar quota framework.

• Nearly 99% of Indian exports to the UK — including textiles, garments, engineering goods, footwear, and seafood — will now face zero tariffs.

According to Indian Foreign Secretary Vikram Misri, “This is a significant agreement that opens unprecedented trade opportunities. Legal vetting is near completion, and parliamentary approvals are expected within a year.”

Trade Impact and Investment Outlook

• The UK is India’s sixth-largest investor, with $36 billion in cumulative investments, while over 1,000 Indian companies operate in the UK, employing more than 100,000 people.

• Bilateral trade reached $55 billion in FY2023–24, and officials expect this figure to increase by over $25 billion annually following the implementation of the FTA.

Indian Commerce Minister Piyush Goyal, who accompanied PM Modi for the signing, emphasized that this deal will strengthen Indian sectors including textiles, pharmaceuticals, automobiles, and electronics.

“The UK is an important export destination for Indian businesses. This agreement offers clarity, consistency, and long-term commercial confidence,” said Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO).

Strategic and Economic Alignment

UK Prime Minister Keir Starmer described the deal as the UK’s most significant post-Brexit trade agreement, signaling renewed geopolitical and economic alignment between the two democracies. It also includes:

• Mobility arrangements for Indian professionals, such as chefs, yoga instructors, musicians, and IT specialists.

• Social security exemption for Indian employees posted to the UK for up to 3 years — expected to save Indian businesses nearly ₹4,000 crore annually.

• Access to India’s government procurement market, worth approximately £38 billion per year, for British businesses.

Implementation Timeline and Future Outlook

The deal will officially take effect after formal ratification by both India’s federal cabinet and the UK Parliament, which officials estimate will happen within 9–12 months.

This FTA marks Prime Minister Modi’s fourth visit to the UK since 2014. Alongside trade discussions, he also held bilateral talks with Prime Minister Starmer on clean energy cooperation, defence partnerships, digital innovation, and higher education linkages.