India-UK FTA: 99% exports to get zero duty

New Delhi

India and the United Kingdom are all set to sign a landmark Free Trade Agreement (FTA) during Prime Minister Narendra Modi’s visit to the UK, beginning Wednesday. The Union Cabinet approved the deal, officially known as the Comprehensive Economic and Trade Agreement (CEPA), on Tuesday. The signing will take place on Thursday in the presence of PM Modi and British Prime Minister Keir Starmer. Commerce Minister Piyush Goyal will also be in London for the occasion.

The FTA, concluded in May, aims to boost trade by reducing or removing tariffs on goods and services between the two nations. India is expected to benefit from zero or reduced tariffs on nearly 99% of its exports to the UK, covering key sectors such as textiles, leather, gems and jewellery, marine products, auto parts, and more.

In return, India will reduce tariffs on 90% of its UK imports over time, with 64% seeing immediate cuts. Notably, British exports like Scotch whisky and gin, which currently face 150% tariffs, will see gradual reductions to 40% over ten years. The UK’s food and drink sector is expected to benefit significantly.

The deal also includes provisions for services such as IT, finance, education, and professional sectors. Indian professionals will enjoy easier mobility and a three-year exemption from social security contributions in the UK.

While the FTA offers major trade benefits, tariff cuts on UK automobiles could challenge India’s domestic auto sector. Talks on auto quotas and carbon border taxes continue separately.

After the UK, PM Modi will head to the Maldives to further regional cooperation under India’s Neighbourhood First policy.