India and the UK are set to sign a free trade agreement on Thursday, said government officials who are in London along with Prime Minister Narendra Modi.
The pact, officially called a comprehensive economic and trade agreement, will be signed in the presence of PM Modi and British Prime Minister Keir Starmer by India’s Commerce and Industry Minister, Piyush Goyal, and his British counterpart, Jonathan Reynolds.
The agreement was concluded in May (announced on May 6) and will help double trade between the two countries to as much as USD 120 billion by 2030, say officials.
Once the pact is signed, it will require an approval from the British Parliament before it can take effect, a process that may take about a year.
The pact will allow the export of labour-intensive products such as leather, footwear and clothing at concessional rates, while imports of whisky and cars from Britain will become cheaper.
Under the pact, which also has chapters on issues including goods, services, innovation, government procurement, and intellectual property rights, almost 99 per cent of Indian exports would benefit from zero duty in the UK market.
India and the UK have also concluded the negotiations for the ‘Double Contribution Convention Agreement’, or social security pact that would help avoid double contribution to social security funds by Indian professionals working for a limited period in Britain.
In such trade agreements, two countries either eliminate or significantly reduce customs duties on maximum goods traded between them, while also easing norms for promoting trade in services and bilateral investments.
The main proposals of the agreement include slashing of import duty on British whisky and gin from 150 per cent to 75 per cent before reducing to 40 per cent by ten years of the deal; automotive tariffs will be reduced from over 100 per cent to 10 per cent under a quota.
Other goods with reduced import duties, which can open markets and make trade cheaper for businesses and Indian consumers, include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
It will also open export opportunities for domestic labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals.
On the services front, the agreement eases mobility for professionals including Contractual Service Suppliers; Business Visitors; Investors; Intra-Corporate Transferees; partners and dependent children of Intra-Corporate Transferees with right to work; and Independent Professionals like yoga instructors, musicians and chefs.
India’s exports to the UK rose by 12.6 per cent to USD 14.5 billion, while imports grew by 2.3 per cent to USD 8.6 billion in 2024-25.
The bilateral trade between India and the UK increased to USD 21.34 billion in 2023-24 from USD 20.36 billion in 2022-23.
PM Modi had left for the UK on Wednesday, after which he will fly to the Maldives.
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