India and UK Sign Major Free Trade Deal: What It Means for Both Countries

Nitin Sindhu VY | Mumbai

India and the United Kingdom have finally signed a long-awaited free trade agreement (FTA) after years of negotiations. The deal is expected to boost trade between the two nations, reduce prices on certain goods, and create new business opportunities.  

Key Points of the Deal:
1. Tariff Cuts:
   - For Indian exports: 99% of Indian goods sent to the UK will see lower tariffs.  
   - For UK exports: 90% of British products coming to India will get cheaper due to reduced taxes.  

2. Boost in Trade: 
   - Expected to increase trade by $34 billion (around ₹3 lakh crore).  
   - Indian industries like textiles, fruits, seafood, leather, and jewelry will benefit.  
   - UK businesses in whisky, cars, and services will get better access to India.  

3. Whisky and Cars to Get Cheaper: 
   - Whisky & gin tariffs (currently 150%) will drop to 75% and later to 40%.  
   - UK-made cars (facing 100% tax) will see tariffs fall to 10% over time.  

4. Workers’ Benefits:
   - Indian employees sent to the UK by companies won’t pay social security taxes for 3 years.
   - This helps avoid double taxation but has raised concerns in Britain over job competition.  

Controversies and Challenges:
- No Deal on Services Sector: UK firms in law and accounting still can’t easily operate in India.  
- Visa Issues: UK’s reluctance to grant more work visas for Indian professionals remains a sticking point.  
- New UK Carbon Tax (CBAM): Starting in 2027, the UK will impose extra charges on steel, aluminum, and cement imports—goods India exports. This could reduce the benefits of the FTA. 

Why This Deal Matters:

-For India: First major FTA with a developed economy, helping Indian businesses expand globally.  

- For UK: Biggest trade deal since Brexit, boosting British exports.  

What’s Next?
- The deal still needs final approvals.  
- India is also in talks with the EU and US for similar agreements.  

While the deal brings opportunities, Indian farmers and small businesses must prepare for competition from cheaper UK imports. The government will need to balance economic gains with local industry protection.  

This agreement marks a new chapter in India-UK trade relations, but its real impact will unfold in the coming years.