July 23, 2025
India and the UK will sign a long-negotiated free trade agreement during Modi’s UK visit, finalised in May after three years of intermittent talks
Under the pact, India will reduce tariffs on British whisky and cars, while the UK will offer duty-free access for Indian textiles and electric vehicles
The agreement will take effect once approved by the British Parliament and India’s federal cabinet, likely within a year
Modi will meet UK Prime Minister Keir Starmer and business leaders to discuss trade, energy, health, education, and security
Prime Minister Narendra Modi commenced a two-nation tour, starting with an official visit to the United Kingdom from July 23 to 24, followed by a State Visit to the Maldives from July 25 to 26.
During his time in the UK, Modi is expected to oversee the signing of a free trade agreement (FTA) between India and the UK, according to government officials. The deal, which was finalised in May after three years of on-and-off negotiations, aims to lower tariffs and expand market access on both sides. India is set to ease import duties on British whisky, cars, and select food products. In return, the UK will offer duty-free access to Indian textiles and electric vehicles.
The agreement is expected to significantly enhance bilateral trade by eliminating multiple barriers. It will come into effect once it secures approval from both the British Parliament and India’s federal cabinet—an outcome expected within a year.
India’s Foreign Secretary Vikram Misri described the agreement as a landmark achievement and confirmed that legal vetting is nearly complete. Trade Minister Piyush Goyal will accompany the Prime Minister for the formal signing ceremony, according to a commerce ministry official.
This marks Modi’s fourth official visit to the UK since assuming office in 2014. While in London, he is scheduled to meet with Prime Minister Keir Starmer to discuss trade, energy cooperation, healthcare, education, and security. He will also engage with leading business figures from both nations.
Bilateral trade between India and the UK reached $55 billion during 2023–24. The UK has emerged as India’s sixth-largest investor, with cumulative investments nearing $36 billion. Misri noted that nearly 1,000 Indian companies operate in the UK, collectively employing 100,000 people and investing approximately $20 billion.
As part of the FTA, tariffs on Scotch whisky imported into India will be reduced from 150% to 75% immediately and gradually fall to 40% over the next ten years, according to British government sources. For cars, India will lower tariffs from 100% to 10% under a quota regime that will be progressively liberalised.
In exchange, Indian electric and hybrid vehicle manufacturers are expected to gain access to the UK market under a similar quota-based framework. The commerce ministry indicated that 99% of Indian exports to the UK, including textiles, would face zero duties under the deal. The UK, in turn, will see reductions on 90% of its tariff lines.
Ajay Sahai, Director General of the Federation of Indian Export Organisations, stated that the UK remains a vital market for Indian exporters. He added that the agreement is poised to boost trade and create new opportunities for Indian sectors, including textiles, footwear, marine products, and engineering goods.
Source: Economic Times