The India-UK Free Trade Agreement (FTA), signed on May 6, 2025, marks a “historic milestone” in the economic relationship between India and the United Kingdom. After three years of negotiations, the deal is expected to boost trade, investment, and job creation in both countries.

What is an FTA?
A Free Trade Agreement (FTA) is a pact between two or more countries to reduce or eliminate tariffs, import quotas, and preferences on most (if not all) goods and services traded between them. This makes trade easier and cheaper, benefiting businesses and consumers.

Key Features of the India-UK FTA (Free Trade Agreement):

• The agreement will increase bilateral trade by £25.5 billion ($34 billion) and is projected to double trade to $120 billion by 2030.
• India will remove or reduce tariffs on 90% of tariff lines, covering 92% of UK goods imports. For UK businesses, this means lower costs and better access to India’s fast-growing market.
• Tariffs on UK whisky and gin will be halved immediately, dropping from 150% to 75%, and will fall further to 40% over ten years. This is a big win for UK spirits exporters.
• The auto sector will see Indian Tariffs on British cars fall from over 100% to 10%, making UK vehicles more affordable in India. Quotas will be introduced for auto imports to manage the transition.
• Other British exports like cosmetics, medical devices, aerospace components, lamb, salmon, chocolate, and biscuits will also benefit from reduced tariffs.
• For India, 99% of its exports to the UK will become tariff-free, providing better access for products like textiles, auto parts, IT services, pharmaceuticals, gems &jewellery, leather, and engineering goods.
• Indian professionals will gain easier access to the UK job market, and Indian workers in the UK will be exempt from paying social security contributions for three years, making them more competitive.

This FTA is seen as ambitious and mutually beneficial, especially as global trade faces challenges from rising tariffs elsewhere. It sets a new standard for India’s future trade agreements and strengthens the strategic partnership between the two countries.