India–UK FTA: PM Modi announces historic trade deal with major tariff eliminations in many sectors; check details

Prime Minister Narendra Modi on Tuesday announced the successful conclusion of a historic Free Trade Agreement (FTA) between India and the United Kingdom, calling it a milestone in the two countries’ economic partnership. The agreement was finalised following a conversation between PM Modi and UK Prime Minister Keir Starmer.

Described as a mutually beneficial and forward-looking pact, the FTA not only strengthens bilateral trade but also includes a Double Contribution Convention—a separate social security agreement exempting Indian workers in the UK from double social security payments for a period of three years.

One of the standout features of the FTA is its significant tariff reductions, particularly the creation of zero-duty access for a wide range of Indian exports to the UK. This is expected to boost India’s manufacturing and export competitiveness, especially in labour-intensive sectors.

The UK government announced that India will reduce tariffs on 90% of UK imports, with 85% of them becoming tariff-free over the next ten years.

Tariffs slashed: Liquor, Automobiles Among Key UK Gains

Tariffs on imported UK whisky and gin, currently at 150%, will be halved to 75% immediately and further reduced to 40% by the tenth year of the agreement.

Automobile imports from the UK, which attract over 100% duty, will be brought down to 10% under a quota-based system.

These reductions are expected to give a major price advantage to UK-made Scotch whiskies and automobiles in the Indian market. However, the move could intensify competition for Indian liquor companies, especially in the premium alcobev segment, where local brands have recently expanded their global ambitions.

“Though FTA details are still awaited, from what information we have gathered it seems that the Government has not fully heeded to the pleas of the Indian alcoholic beverage industry. We have always been asking for a level-playing field for the Indian players. We only hope that the government has included in the FTA the MIP (minimum import price) which will prevent dumping / under invoicing and also the removal of non-tariff barriers to ensure better international market access to Indian alcoholic beverages. We fear that if the same template of duty reduction is followed for the trade deals with the EU, the US and other nations which produce spirits and wines, then the Indian Alcobev industry, including the wine sector, could get adversely impacted,” said Anant S Iyer, Director General, Confederation of Indian Alcoholic Beverage Companies. 

He added: “The government is looking to touch $1 billion exports from the Indian Alcobev industry by 2030. However, without ensuring proper market access especially to the Western nations, it will be difficult to meet the export target. While the other sectors might be benefitting from the FTA, the Indian Alcobev industry seeks similar benefit. Though Indian whiskys, rum and gins have been winning accolades globally, without removal of non-tariff barriers and granting of market access it will be difficult for the Indian Alcobev sector to meet the export target.” 

Zero duty on 99% of Indian export lines

The FTA offers unprecedented market access to Indian exporters. Over 99% of India’s tariff lines will enjoy zero duty in the UK, covering nearly 100% of the trade value. This is expected to significantly boost India’s exports across agriculture, processed foods, and industrial goods.