New Delhi: India and the UK on Thursday inked a landmark free trade agreement (FTA) that will significantly improve market access and will boost bilateral trade by around USD 34 billion annually. The deal was formalised in presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer.
The FTA is expected to benefit 99 per cent Indian exports from tariff and will make it easier for British firms to export whisky, cars and other products to India besides boosting the overall trade basket, according to officials.
The trade deal, firmed up after three years of negotiations, is expected to ensure comprehensive market access for Indian goods across all sectors and India will gain from tariff elimination on about 99 per cent of tariff lines (product categories) covering almost 100 per cent of the trade values, they said.
The UK said Indian consumers will benefit from improved access to the best British products — from soft drinks and cosmetics to cars and medical devices — as average tariffs will drop from 15 per cent to 3 per cent after the FTA kicks in.
The UK already imports 11 billion pounds in goods from India but liberalised tariffs on Indian goods will make it easier and cheaper for British consumers and businesses to buy Indian products and boost Indian businesses’ exports to the UK, it said in a statement, hours before the FTA was inked.
“Our landmark trade deal with India is a major win for Britain,” Starmer was quoted as saying in the readout.
Prime Minister Narendra Modi reached London on Wednesday, kickstarting his two-day visit to the UK with the deal set to be a major outcome of his trip. The prime minister was received at the airport by UK Foreign Office Minister in charge of the Indo-Pacific, Catherine West, along with Indian High Commissioner to the UK Vikram Doraiswami and British High Commissioner to New Delhi Lindy Cameron.
“Landed in London. This visit will go a long way in advancing the economic partnership between our nations,” Prime Minister Modi said in a statement on X. “The focus will be on furthering prosperity, growth and boosting job creation for our people. A strong India-UK friendship is essential for global progress,” he added.
The Indian diaspora in the United Kingdom welcomed PM Modi. “Touched by the warm welcome from the Indian community in the UK. Their affection and passion towards India’s progress is truly heartening,” he said in a post on X.
Modi will hold wide-ranging talks with his British counterpart Keir Starmer on Thursday that is expected to focus on imparting a new momentum in the strategic ties between the two countries.
Starmer is set to host Modi for the talks at Chequers, the official country residence of the British prime minister that is located 50 km northwest of London. Modi was greeted by cheering groups of community leaders, students and parliamentarians gathered in anticipation on the outskirts of London. They expressed excitement around the FTA that is expected to be signed on Thursday as a sign of strengthening ties.
“It’s a great achievement for both the governments and especially for the Indian diaspora, which is really excited to see the prime minister here after so many years. He’s again here for a very short visit, but at least we get a chance to greet him,” said Overseas Friends of BJP (OFBJP) diaspora group president Kuldeep Shekhawat.
Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynolds are likely to sign the FTA in the presence of the two prime ministers on Thursday, people familiar with the matter said. Earlier in May, India and the UK sealed the free trade agreement that is expected to benefit 99 per cent Indian exports from tariff and will make it easier for British firms to export whisky, cars and other products to India besides boosting the overall trade basket.
The trade deal, firmed up after three years of negotiations, is expected to ensure comprehensive market access for Indian goods across all sectors and India will gain from tariff elimination on about 99 per cent of tariff lines (product categories) covering almost 100 per cent of the trade values, according to officials.
Along with the FTA — the biggest the UK has done since leaving the European Union — the two sides also sealed a double contribution convention. It provides for exemption for employers of Indian workers from paying social security contributions in the UK. In his departure statement, Modi said India and UK share a comprehensive strategic partnership that has witnessed significant progress in recent years.
“Our collaboration spans a wide range of sectors, including trade, investment, technology, innovation, defence, education, research, sustainability, health and people-to-people ties,” he said. The prime minister said he and Starmer will have the opportunity to further enhance the bilateral economic partnership. “The objective is to have the Free Trade Agreement land,” High Commissioner Doraiswami said on the eve of the visit.
“It is a detailed and ambitious document, which is probably our most ambitious Free Trade Agreement to date… It will have a very important impact upon both economies and help drive growth in both countries,” he said. The India-UK bilateral trade crossed USD 55 billion in 2023-24. The UK is the sixth largest investor in India, with a cumulative investment of USD 36 billion.
India’s investments in the UK are close to USD 20 billion and some 1,000 Indian companies operating in Britain provide employment to almost 100,000 people. Modi will also meet King Charles III during the visit.
From London, Modi will travel to the Maldives at the invitation of President Mohamed Muizzu in what is being seen as a breakthrough in the ties between the two countries following a spell of frostiness under Muizzu.
