The much-anticipated UK-India Free Trade Agreement (FTA) is set to be formally signed on Thursday during Indian Prime Minister Narendra Modi’s visit to the UK. After nearly three years of negotiations, the pact promises significant economic gains for both countries. It will still need approval from the British Parliament and India’s federal cabinet, likely within the year.
Here’s a breakdown of who gains what under this landmark trade deal:
What’s in It for the UK?
1. Boost to the UK Economy
- The British government estimates that the trade pact will increase the UK’s GDP by £4.8 billion ($6.5 billion) annually in the long term.
- British consumers are expected to enjoy cheaper garments, footwear, and food items imported from India.
2. Big Wins for UK Businesses
- Lower tariffs on UK exports to India:
- Whisky and gin duties will fall from 150% to 75% immediately, dropping further to 40% within a decade.
- Tariffs on cars will fall dramatically from 100%+ to just 10% under a quota system.
- Cuts on cosmetics, medical devices, salmon, chocolates, and biscuits will make British products more competitive in India.
- Major beneficiaries:
- Diageo (whisky)
- Aston Martin (luxury cars)
- Tata-owned Jaguar Land Rover (luxury cars targeting India’s growing affluent class)
3. Access to India’s Lucrative Government Procurement Market
- British suppliers will gain access to non-sensitive Indian government tenders above 2 billion rupees.
- This opens a public procurement market worth about £38 billion annually, according to UK estimates.
What’s in It for India?
1. Duty-Free Access for Indian Exports
- The UK will provide duty-free access to 99% of Indian items, covering nearly 100% of trade value.
- Indian sectors likely to benefit:
- Textiles & Apparel – Companies like Welspun India, Arvind Ltd, Raymond, and Vardhman.
- Footwear – Bata India, Relaxo.
- Auto Components & Vehicles – Tata Motors, Mahindra Electric, Bharat Forge.
- Gems & Jewellery, Furniture, Sports Goods, Chemicals, and Machinery will also enjoy zero or minimal duties (down from 4%-16%).
2. Services and Worker Benefits
- The UK will provide assured access for temporary stays to:
- Business visitors, contractual service providers, yoga instructors, chefs, and musicians.
- Indian workers temporarily employed in the UK will be exempted from paying social security contributions for three years—saving Indian workers and employers an estimated ₹40 billion ($463 million) annually.
3. Expansion of Indian Exports in the UK Market
- Duty-free access will boost competitiveness of Indian consumer goods in the UK, making Indian garments, furniture, footwear, and processed foods cheaper for British buyers.
The Big Picture
This FTA marks a significant step in strengthening UK-India economic ties, with both sides gaining access to each other’s fast-growing markets. For the UK, it means new opportunities post-Brexit, cheaper imports, and increased investments in India. For India, it opens up a high-value export market, boosts employment in key sectors, and saves millions for Indian professionals working in Britain.
