99% Indian exports to UK duty-free, tariffs cut on UK goods
Scotch whisky duty halved, EV import duty cut significantly
London, New Delhi: India and the United Kingdom on Thursday signed a landmark Free Trade Agreement, expected to increase bilateral trade by nearly $34 billion annually. The deal was formalised in London during Prime Minister Narendra Modi’s visit, with Commerce Minister Piyush Goyal and UK Business Secretary Jonathan Reynolds representing the two sides. This is India’s most ambitious trade deal in over a decade and the UK’s first major post-Brexit agreement. Both governments have called it a milestone in their economic relationship.
Prime Minister Modi described the pact as a new roadmap for shared prosperity. It is expected to benefit a wide spectrum of stakeholders—from farmers and fishermen to small businesses and professionals. Indian exports such as textiles, gems and jewellery, seafood, leather goods, engineering products and processed foods will now enjoy near-zero duty access to the UK.
Meanwhile, British goods like medical devices, aerospace parts, cars, whisky, chocolates and cosmetics will enter the Indian market with sharply reduced tariffs, dropping from an average of 15% to around 3%.
Agneshwar Sen, Trade Policy Leader at EY India, called the agreement a transformative move that will open up almost all trade between the two economies. He said the elimination of tariffs on key Indian exports would boost job creation and growth in labour-intensive sectors. Sen also highlighted that the pact includes significant benefits for Indian service professionals, including relaxed visa rules and a landmark social security arrangement. “Consumers on both sides will be the ultimate winners with greater choice and lower prices. This deal is not just about trade but about future-ready cooperation between two dynamic economies,” he said.
The leather industry expects to capture an additional 5% of the UK market within two years. Engineering and electronics exports could double by 2030, while chemical exports are projected to rise by 40% in the next fiscal. Software services are expected to grow by 20% annually once the agreement takes effect.
Indian professionals will also benefit from easier access to work in the UK. The deal opens up 35 sectors for Indian talent to work for up to two years without requiring a local office presence.
Freelancers, chefs, musicians, yoga instructors and contract-based workers will be able to tap into new opportunities. Industry officials estimate that over 60,000 IT professionals every year could benefit, particularly those employed by major firms like TCS, Infosys, Tech Mahindra, HCL Technologies and Wipro.
A key part of the deal is a provision exempting Indian professionals on short-term assignments from paying UK social security contributions for up to three years. Puneet Gupta, Partner at EY India’s People Advisory Services, said this will ease the financial and compliance burden for both companies and employees.
“Employees can continue contributing to their home country’s system, preserving their social security continuity. It also makes overseas assignments more viable and efficient for global employers,” Gupta said.
From the UK’s perspective, the agreement will make 90% of its exports to India cheaper, with 85% of those becoming fully duty-free over the next ten years. British companies will also be allowed to bid on non-sensitive Indian government contracts worth over Rs 2,000 crore, opening access to around 40,000 tenders a year. UK officials estimate this could lead to over 2,000 new jobs and a 2.2 billion wage boost.
The deal also includes dedicated chapters on financial services and intellectual property. UK firms will get treatment on par with Indian companies in the financial sector. Concerns that the agreement could tighten India’s generic drug production rules were addressed, with assurances that affordable medicine access will remain unaffected.
UK Prime Minister Keir Starmer called the deal a big win for Britain. He said it would create thousands of jobs and bring more investment into the UK economy. As part of the wider trade engagement, 26 UK companies will launch new business ventures in India, while Indian firms have committed nearly 6 billion in investments into the UK.
