Prime Minister Narendra Modi on Tuesday announced the successful conclusion of a historic Free Trade Agreement (FTA) between India and the United Kingdom, calling it a milestone in the two countries’ economic partnership. The agreement was finalised following a conversation between PM Modi and UK Prime Minister Keir Starmer.
Described as a mutually beneficial and forward-looking pact, the FTA not only strengthens bilateral trade but also includes a Double Contribution Convention—a separate social security agreement exempting Indian workers in the UK from double social security payments for a period of three years.
One of the standout features of the FTA is its significant tariff reductions, particularly the creation of zero-duty access for a wide range of Indian exports to the UK. This is expected to boost India’s manufacturing and export competitiveness, especially in labour-intensive sectors.
The UK government announced that India will reduce tariffs on 90% of UK imports, with 85% of them becoming tariff-free over the next ten years.
Tariffs slashed: Liquor, Automobiles Among Key UK Gains
Tariffs on imported UK whisky and gin, currently at 150%, will be halved to 75% immediately and further reduced to 40% by the tenth year of the agreement.
Automobile imports from the UK, which attract over 100% duty, will be brought down to 10% under a quota-based system.
These reductions are expected to give a major price advantage to UK-made Scotch whiskies and automobiles in the Indian market. However, the move could intensify competition for Indian liquor companies, especially in the premium alcobev segment, where local brands have recently expanded their global ambitions.
“Though FTA details are still awaited, from what information we have gathered it seems that the Government has not fully heeded to the pleas of the Indian alcoholic beverage industry. We have always been asking for a level-playing field for the Indian players. We only hope that the government has included in the FTA the MIP (minimum import price) which will prevent dumping / under invoicing and also the removal of non-tariff barriers to ensure better international market access to Indian alcoholic beverages. We fear that if the same template of duty reduction is followed for the trade deals with the EU, the US and other nations which produce spirits and wines, then the Indian Alcobev industry, including the wine sector, could get adversely impacted,” said Anant S Iyer, Director General, Confederation of Indian Alcoholic Beverage Companies.
He added: “The government is looking to touch $1 billion exports from the Indian Alcobev industry by 2030. However, without ensuring proper market access especially to the Western nations, it will be difficult to meet the export target. While the other sectors might be benefitting from the FTA, the Indian Alcobev industry seeks similar benefit. Though Indian whiskys, rum and gins have been winning accolades globally, without removal of non-tariff barriers and granting of market access it will be difficult for the Indian Alcobev sector to meet the export target.”
Zero duty on 99% of Indian export lines
The FTA offers unprecedented market access to Indian exporters. Over 99% of India’s tariff lines will enjoy zero duty in the UK, covering nearly 100% of the trade value. This is expected to significantly boost India’s exports across agriculture, processed foods, and industrial goods.
📦 Key Product Categories Gaining Zero-Duty Access to UK
| Category | Pre-FTA Duty Range | FTA Tariff Outcome |
|---|---|---|
| Animal products | Up to 20% | 99.3% tariff lines at zero duty |
| Vegetable/oil products | Up to 20% | 99.8% tariff lines at zero duty |
| Processed food | Up to 70% | 99.7% tariff lines at zero duty |
| Minerals | Up to 8% | Zero duty |
| Chemicals | Up to 8% | Zero duty |
| Plastic/Rubber | Up to 6% | Zero duty |
| Leather/Footwear | Up to 16% | Zero duty |
| Wood/Paper | Up to 10% | Zero duty |
| Textile/Clothing | Up to 12% | Zero duty |
| Headgear/Glass/Ceramic | Up to 12% | Zero duty |
| Gems & Jewellery | Up to 4% | Zero duty |
| Base Metals | Up to 10% | Zero duty |
| Mechanical Machinery | Up to 8% | Zero duty |
| Electrical Machinery | Up to 14% | Zero duty |
| Transport/Auto Components | Up to 18% | Zero duty |
| Instruments/Clocks | Up to 6% | Zero duty |
| Arms & Ammunition | Up to 2% | Zero duty |
| Furniture/Sports Goods | Up to 4% | Zero duty |
| Works of Art | 0% | Zero duty |
What does this mean for India
This sweeping elimination of import duties on Indian goods positions India to become more deeply integrated into the UK and global supply chains. It will be a major boost to MSMEs, job creation, and sectoral competitiveness, particularly in segments like textiles, footwear, food processing, engineering goods, and gems & jewellery.
The FTA sets a new benchmark for future trade agreements, blending economic diplomacy with strategic ambition, while reinforcing India’s position as a trusted global trade partner.
Assocham President Sanjay Nayar said: “ASSOCHAM, on behalf of Indian industry, commends PM Modi for his leadership in concluding a path breaking trade agreement with the United Kingdom. This landmark India–UK Free Trade Agreement and the Double Contribution Convention is a win-win for both nations and will deepen our Comprehensive Strategic Partnership, fostering trade, investment, innovation, and wealth creation. We also congratulate Indian and UK Governments for taking this initiative in this ever-evolving global trade and investment scenario. A new era of India–UK economic partnership begins!”
Both countries are also pursuing individual agreements with the United States to eliminate some of the tariffs implemented by US President Donald Trump, which have disrupted the global trade system. As a result, there is a heightened emphasis in both London and New Delhi on finalising a trade deal between the UK and India.
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