CHENNAI: India and the United Kingdom are set to sign a landmark Free Trade Agreement (FTA) on July 24, 2025, during Prime Minister Narendra Modi’s official visit to London. This is India’s first major bilateral trade deal with a developed economy in over a decade. The agreement follows nearly three years of negotiations and is expected to come into force within a year, pending approvals from the UK Parliament and India’s Union Cabinet.
Here's a list of important tariff reductions and concessions on goods and services agreed upon by both countries:
Key Tariff Changes
Alcoholic beverages: Import duties on Scotch whisky and gin will drop from 150% to 75% immediately, and to 40% over the next 10 years.
Automobiles: Tariffs on UK-manufactured cars, which currently exceed 100%, will be cut to 10% under a quota-based system.
Other goods: India will reduce or eliminate tariffs on products like cosmetics, salmon, chocolates, biscuits, and medical devices.
India Gains
Almost 99% of Indian goods will get duty-free access to the UK market. This includes products from sectors like textiles, footwear, gems and jewellery, auto components, machinery, chemicals, sports goods, furniture, and pharmaceuticals.
Textiles and apparel: Current UK tariffs of 8–16% will be eliminated. This is expected to boost exports from key textile hubs like Tiruppur, Surat, and Ludhiana. Beneficiary companies will be Welspun India, Arvind Ltd.
Footwear: Zero-duty access will benefit manufacturers in Agra, Kanpur, and Chennai. This will benefit companies like Bata India and Relaxo.
Automobiles and electric vehicles: Indian EV and hybrid carmakers like Tata Motors and Mahindra Electric will benefit from reduced import tariffs and preferential quotas.
Gems and jewellery: Removal of UK duties (up to 16%) will aid exporters, particularly from Gujarat and Maharashtra.
Auto components and engineering goods: Zero tariffs to benefit companies like Bharat Forge.
Pharmaceuticals and medical devices: Improved access for Indian pharma companies to the UK market.
Furniture, toys, sports goods, chemicals, and machinery: Reduced or zero tariffs will provide an export boost to these sectors.
UK Gains
Alcohol and luxury goods: UK-based firms like Diageo (Scotch whisky) and luxury carmakers such as Aston Martin and Jaguar Land Rover (owned by Tata Motors) will gain improved market access in India.
Automobiles: British luxury vehicles will enter India under a lower-tariff quota system.
Professional access to UK: Indian professionals including yoga instructors, chefs, musicians, and other service providers will have easier short-term entry to the UK.
Social security relief: Indian professionals on temporary assignments in the UK will be exempt from paying social security contributions for up to three years, with estimated annual savings of ₹4,000 crore.
Government procurement: UK companies can bid on Indian federal government tenders worth over ₹200 crore in non-sensitive sectors. This opens access to around ₹4.09 lakh crore in annual tenders.
Macroeconomic Projections
According global trade experts, this India–UK FTA marks a significant milestone in bilateral trade, offering major tariff concessions, enhanced market access, and new opportunities in services and public procurement. And it is expected to boost exports, attract investment, and strengthen economic ties between the two countries across strategic sectors.
UK government estimates the FTA will increase its GDP by £4.8 billion annually. Indian exports to the UK are expected to double by 2030.
Currently, over 1,000 Indian firms operate in the UK, employing over 1 lakh people and investing about $20 billion.
The UK has so far invested close to $36 billion in India, making it the sixth-largest foreign investor.