India-UK Free Trade Agreement Sealed! PM Modi Terms It 'Historic': Top 10 Biggest Takeaways From FTA

In a landmark achievement for India and the United Kingdom's bilateral trade, the two nations on Tuesday finalised the Free Trade Agreement. Prime Minister Narendra Modi hailed India-UK FTA and called it a 'historic milestone' which will catalyse trade, investment, growth, job creation and innovation.

For the UK, it is the 'biggest and most economically significant' bilateral trade deal it has ever had since leaving the European Union in 2020, popularly known as Brexit.

India-UK FTA: Top 10 Takeaways

India-UK FTA has been finalised after a three-year-long stop-start negotiations between the two countries, reported Reuters on Tuesday. The deal is likely to increase bilateral trade by nearly $34 billion by 2040 with liberal market access and eased trade restrictions.

India-UK FTA: PM Modi Hails The Pact

PM Modi in a social media post lauded the deal and expressed optimism of strengthened cooperation between India and UK. "In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies," read a post by PM Modi on X.

What is FTA?

Free Trade Agreements, aka FTAs, are bilateral pacts between two or more nations or trading blocs where they agree to reduce or eliminate customs tariffs and non-tariff barriers on substantial trade between them, according to the Ministry of Commerce and Industry's Department of Commerce.

What Do FTAs Cover?

As per Commerce Ministry's FAQ, FTAs normally include trade in goods like agricultural or industrial products, or trade in services, (such as banking, construction, trading etc.). FTAs can also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy, etc.

What Will the India-UK FTA Cover?

India-UK FTA deal will cover a range of products including whisky, cosmetics, medical devices, aerospace, lamb, salmon, electrical machinery, soft drinks, chocolate and biscuits.

According to the UK Government's press release, Indian tariffs on key products like whisky, cosmetics and medical devices are locking in reductions on 90% of tariff lines. Whisky and gin tariffs will be cut to half from 150% to 75% before reducing to 40% by year ten of the deal, while automotive tariffs will go from over 100% to 10% under a quota.

India-UK FTA: How Will it Benefit India

India-UK FTA will significantly benefit India's market access in the UK. Indian goods will directly benefit from the zero duty clause. It will also have a positive impact on manufacturing across labour and technology-intensive sectors and open export opportunities for sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery and other important sectors such as engineering goods, auto parts and engines and organic chemicals.

India-UK FTA: What is Double Contribution Convention?

It will also have a positive impact on India's employment. Under the FTA, Indian workers temporarily working in the UK and their employers are exempted from paying social security contributions in the UK for three years under the Double Contribution Convention. The move would also provide better job opportunities for Indians working in the UK.

India-UK FTA: How Will Agreement Benefit UK?

The deal is likely to increase the bilateral trade between two countries by £25.5 billion. The Britain government expects, India-UK FTA to boost UK GDP by £4.8 billion and wages by £2.2 billion each year in the long run. Lesser barrier for UK firms will provide them easier access to Indian markets leading to a significant expansion in their business.

India-UK FTA 'New Era' Of Trade, Says UK PM

Commenting on India-UK FTA, UK Prime Minister Keir Starmer said, "We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy, putting more money in working people's pockets."
"Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home," he added.

India-UK FTA: What Will Be Its Impact on Bilateral Trade

The India-UK FTA is likely to double or even triple the bilateral trade between the two nations over the next decade, reported Business Standard.

India-UK FTA: Why It Is More Important Than Ever Now?

India-UK FTA finalisation has come at a time when USA's isolatory policy, under the leadership of President Donald Trump, has sparked concerns across the world.
"In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever," said UK Business and Trade Secretary Jonathan Reynolds