India and UK Finalise Free Trade Agreement Reducing Duties on Whisky and Cars

India and the UK have finalised a significant free trade agreement, promising to make British Scotch whisky and cars more affordable in India. This deal will also lower tariffs on Indian exports like garments and leather goods to the UK. Prime Minister Keir Starmer and his Indian counterpart Narendra Modi announced the conclusion of these negotiations. Additionally, they have wrapped up discussions on the Double Contribution Convention Agreement.

Representative image

The agreement outlines a reduction in duties on UK whisky and gin from 150% to 75%, eventually dropping to 40% in the tenth year. Automotive tariffs will decrease from over 100% to 10%, but this will be subject to a quota. India stands to benefit from tariff elimination on nearly 99% of product categories, covering almost all trade value, which is expected to boost bilateral trade opportunities significantly.

Trade Growth and Economic Impact

Official estimates suggest that this free trade agreement could double bilateral trade by 2030. It is also projected to contribute GBP 4.8 billion annually to the British economy by 2040. The UK Department for Business and Trade highlighted that besides whisky and gin, tariff reductions have been achieved on medical devices, advanced machinery, and lamb.

The agreement is anticipated to increase bilateral trade, currently valued at GBP 41 billion annually, by an additional GBP 25.5 billion each year. In the long term, UK wages are expected to rise by GBP 2.2 billion annually due to this deal.

Professional Visas and Contributions

One of India's key demands was a Double Contributions Convention pact. This ensures professionals in either country won't pay national insurance or social security contributions in both nations. On professional visas, the UK clarified that its immigration policy remains unchanged but will offer a streamlined process for business mobility.

India has successfully included categories such as chefs, musicians, and yogis in the UK's professional visa routes. Britain also stated that the agreement covers chapters on anti-corruption, consumer protections, labour rights, gender, and development.

Future Steps and Parliamentary Approvals

An accompanying bilateral investment treaty is still under negotiation but is expected to conclude soon. Before the FTA can be officially enforced, it requires parliamentary approvals and sign-offs, which are anticipated to take about a year.

The deal will undergo legal text formalisation before being approved by the British Parliament. Modi expressed enthusiasm about this milestone on X: "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."

Starmer described it as "the biggest deal the UK has done since leaving the EU European Union and the most ambitious India has ever done." He looks forward to visiting India soon.

With inputs from PTI