India and UK Expected to Sign the Trade Agreement Next Week

India and the United Kingdom are expected to sign a Free Trade Agreement (FTA) next week, as per news reports. The legal teams from both sides have completed most of the work on finalising the agreement text. The deal was formally concluded on May 6, 2025, after which legal vetting began.

Once signed, the FTA will require ratification in both countries before it comes into effect. In the UK, the Parliament will need to approve it, which could take up to a year. In India, Cabinet approval is required. Full implementation may take a similar timeline.

Tariff Reductions and Trade Access

India will reduce or remove tariffs on 90% of UK tariff lines, covering 92% of its imports from the UK. In return, the UK will eliminate tariffs on 99% of Indian goods, covering nearly all of India’s exports to Britain. The agreement will eliminate export taxes on labour-intensive goods like leather, footwear, and apparel, and reduce import duties on UK whisky and cars. This is expected to double trade between the two nations to $120 billion by 2030.

The agreement allows easier movement for Indian professionals, including contractual service suppliers, business visitors, intra-corporate transferees, and their dependents. Independent professionals such as chefs and yoga instructors are also covered under mobility provisions.

Automobile and Liquor Imports

India will reduce import duties on a limited number of British cars from 100% to 10%. The transition will begin with ICE vehicles and gradually include EVs and hybrids. Tariffs on whisky and gin will drop from 150% to 75% immediately, and to 40% over 10 years.

Service Sector and Investment

India has agreed to maintain the 74% FDI limit in banking and insurance for UK companies. The FTA also grants UK firms access to some government procurement and equal treatment in select service sectors like telecom and construction.

A social security agreement has been finalised, ensuring that workers will only need to contribute in one country when temporarily posted abroad. This will apply for up to three years and prevent overlapping contributions.

Products such as sugar, pork, milled rice, chicken, and eggs are excluded from liberalisation under this agreement.

Conclusion

The FTA is expected to be signed next week. If approved by both governments, it will come into effect after about a year, impacting trade, mobility, and investments between India and the UK.

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