India-UK Trade Deal Signed! IT, Textile, Jewellery Trade To Get Big Benefit

In a significant development, India and the United Kingdom on Thursday, July 24, signed a free trade agreement (FTA) in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer. This agreement, initially reached in May, was formalised during PM Modi's visit to the UK. The FTA aims to boost bilateral trade to $120 billion by 2030, effectively doubling the current trade volume between the two nations.

The agreement promises reduced tariffs on exports of labour-intensive goods such as leather, footwear, and clothing. It also lowers import duties on British whisky and automobiles. Commerce and Industry Minister Piyush Goyal and his British counterpart Jonathan Reynolds signed the document. However, it requires approval from the British Parliament before it can be implemented, a process expected to take about a year.

Key Provisions of the India-UK Trade Deal

The FTA ensures that 99% of Indian exports will gain duty-free access to British markets. Such agreements typically involve eliminating or significantly reducing customs duties on most traded goods. They also aim to simplify regulations to encourage service trade and mutual investments between the countries.

The agreement includes various sections addressing trade aspects like goods, services, innovation, government procurement, and intellectual property rights. A notable provision is halving import duties on UK-produced whisky and gin from 150% to 75%, with a further reduction to 40% over ten years. Automobile tariffs will also see a significant cut from over 100% to 10%, subject to quota restrictions.

Impact on Various Sectors

This deal is set to create export opportunities for sectors employing large workforces in India. These include textiles, marine products, leather goods, footwear, sports equipment, toys, gems and jewellery, engineering products, automotive components and engines, as well as organic chemicals.

The services component of the trade deal facilitates movement for various professionals like yoga instructors, musicians, chefs, business visitors, investors, contractual service suppliers, intra-corporate transferees along with their partners and dependent children who are granted work rights.

Additional Agreements

India and the UK have concluded discussions on the Double Contribution Convention Agreement or social security agreement. This arrangement ensures that Indian professionals working temporarily in Britain won't have to make duplicate payments towards social security funds.

India's exports to the UK grew by 12.6%, reaching $14.5 billion while imports increased by 2.3% to $8.6 billion in 2024-25. The trade volume between India and the UK rose to $21.34 billion in 2023-24 from $20.36 billion in 2022-23.

This historic trade agreement marks a new chapter in India-UK relations by fostering economic growth through enhanced bilateral trade opportunities across multiple sectors.