New Delhi: India and the UK will sign a free trade agreement on Thursday in London that will allow export of labour-intensive products such as leather, footwear and clothing at concessional rates, while making imports of whisky and cars from Britain cheaper.
The pact also helps double trade between the two economies to USD 120 billion by 2030.
The pact, officially called a comprehensive economic and trade agreement, will be signed in the presence of Prime Minister Narendra Modi and British Prime Minister Keir Starmer.
It will take effect after the British parliament and India’s federal cabinet approve it, likely within a year.
“This is a significant agreement,” Vikram Misri, India’s foreign secretary, told reporters on Tuesday, adding that legal vetting of the deal was near completion ahead of Modi’s four-day trip to the UK and Maldives.
Trade minister Piyush Goyal will accompany Modi for the formal signing, a commerce ministry official said.
This will be Modi’s fourth visit to the UK since he took office in 2014. He is scheduled to meet Prime Minister Keir Starmer to discuss trade, energy, security, health and education issues, and also hold talks with business leaders.
Bilateral trade between the two countries reached $55 billion in 2023/24, while the UK has become India’s sixth-largest investor, with cumulative investments of nearly $36 billion, Misri said.
Around 1,000 Indian companies operate in the UK, employing 100,000 people, and they have invested about $20 billion there, he added.
Under the trade agreement, tariffs on Scotch whisky will drop to 75 per cent from 150 per cent immediately, and then slide to 40 per cent over the next decade, according to the British government, and on cars, India will cut duties to 10 per cent from 100 per cent under a quota system that will be gradually liberalised.
In return, Indian manufacturers are expected to gain access to the UK market for electric and hybrid vehicles, also under a quota system, Indian commerce ministry officials said.
The ministry has said 99 per cent of Indian exports to Britain would benefit from zero duties under the deal, including textiles, while Britain will see reductions on 90 per cent of its tariff lines.
“The UK is an important market for Indian exporters,” said Ajay Sahai, director general of the Federation of Indian Export Organisations, adding that the trade pact will boost bilateral trade and provide access for Indian sectors such as textiles, footwear, marine and engineering products.
