23 July 2025: During Prime Minister Narendra Modi’s UK visit, a highlight will be the signing of a free trade agreement (FTA) between the two countries.
Whisky, cars, EVs, textiles are some of the goods and sectors that will benefit after the pact, negotiations for which concluded in May after three years of stop-start talks, news agency Reuters reported.
While India’s cabinet is reported to have okayed it already, the British parliament’s nod is needed, too, and is likely within a year.
Scale of trade between India and UK
Bilateral trade between India and the UK is over $50 billion. The UK is also reported to be India’s sixth-largest foreign investor.
Around 1,000 Indian companies operate in the UK, employing over 1 lakh (100,000) people. They have invested about $20 billion there, India’s foreign secretary Vikram Misri said on Tuesday.
Key facts about the India-UK trade deal
- Overall reduction: The Indian commerce ministry has said 99% of Indian exports to Britain would benefit from zero duties under the deal. Britain will see reductions on 90% of its goods. From India, textiles, footwear, gems, jewellery, and auto components are among items likely to have zero duties, down from current 4-16%.
- About cars: India will cut duties to just 10% from the current 100% on cars imported from the UK; but there will be a quota system, as in, the reduced levy will apply to a limited number of imported cars. The number will be gradually liberalised, according to the deal. Aston Martin and Tata-owned Jaguar Land Rover could benefit from this.
- Access for EVs: In return for easing import duties on UK goods, Indian manufacturers are expected to gain access to the British market for electric and hybrid vehicles, that also under a quota system. Manufacturers like Tata Motors and Mahindra Electric could benefit.
- Visa and stay ease: The UK will provide assured access for temporary stay to business visitors and contractual service providers as well as to yoga instructors, chefs and musicians. Indian workers working temporarily in the UK and their employers will be exempted from paying social security contributions in the UK for three years.
- Clothes and shoes: Indian textile and apparel manufacturers such as Welspun India, Arvind, Raymond, Vardhman likely to benefit from duty-free access for exports to the UK, Reuters has reported, Footwear manufacturers such as Bata India and Relaxo would also gain easier UK market access.
- Low tax on spirits: Tariffs or import duties on Scotch whisky will drop to 75% from 150% immediately, and then slide to 40% over the next decade. UK firms, including Diageo that most famously makes and sells Johnnie Walker, would benefit.
- Eligibility for tenders: India will also give access to British suppliers for non-sensitive government tenders, with a limit of ₹2 billion (200 crore).
“The seminal point of the visit is signing of the bilateral free trade agreement,” former senior diplomat Mahesh Sachdev told ANI.
Commerce minister Piyush Goyal is accompanying PM Modi for the formal signing.
This is Modi’s fourth visit to the UK since he became PM in 2014. He is scheduled to meet UK PM Keir Starmer to discuss trade, energy, security, health and education issues, and also hold talks with business leaders.
“The UK is an important market for Indian exporters,” Ajay Sahai, director general of the Federation of Indian Export Organisations. The pact will boost bilateral trade and provide access for Indian sectors such as textiles, footwear, marine and engineering products, he told Reuters.
Summary:
Modi will sign an India–UK FTA reducing tariffs on British cars and whisky in India, while India gains duty‑free access for textiles and EVs