The India-UK Free Trade Agreement (FTA) signed in July 2025 marks a significant economic milestone, leading to reduced tariffs on various products and cheaper imports such as Scotch whisky, cars, chocolates, and medical devices, benefitting consumers in both countries.
Background of the FTA
Initiated in January 2022, the India-UK FTA concluded after extensive negotiations and diplomatic efforts, culminating in its official signing during PM Narendra Modi’s visit to the UK in July 2025. This agreement is considered a crucial trade pact for both nations post-Brexit.
Significance of the Agreement
- Eliminates duties on 99% of Indian exports to the UK.
- Reduces prices for high-end imports like whisky, cars, chocolates, and medical devices for Indian consumers.
- Expected to boost the UK’s GDP by £4.8 billion ($6.5 billion) annually.
- Aims to double Indian exports to the UK by 2030.
Objectives of the FTA
- Promote affordable and wider access to goods and services.
- Encourage investment and innovation.
- Support MSMEs and exporters in both nations.
- Facilitate temporary movement of skilled professionals.
- Reduce non-tariff barriers and improve market access.
What Will Become Cheaper for Indians?
1. Scotch Whisky & Gin
- Tariffs: Reduced from 150% to 75% initially, and to 40% over the next decade.
- Brands: Benefits premium labels like Diageo.
2. British Luxury Cars
- Import Duties: Decrease from over 100% to 10% under a quota system.
- Brands: Favorable for Jaguar Land Rover and Aston Martin.
3. Chocolates, Biscuits & Salmon
- Products: British-made chocolates, biscuits, and salmon.
- Availability: Better prices on supermarket shelves.
4. Cosmetics & Personal Care
- Tariffs: Reduced on cosmetics and skincare products.
- Brands: Especially beneficial for leading British cosmetic companies.
5. Medical Devices
- Access: Easier and cheaper UK-manufactured medical devices.
Who Benefits in India?
1. Textile & Leather Exporters
- Impact: Boosts exports and job creation by eliminating UK duties.
2. Gems & Jewellery Sector
- Tariffs: Zero on gold, diamonds, and jewellery, promoting Indian craftsmanship.
3. Agro, Pharma & Processed Foods
- Benefits: Tariff reductions for sectors like rice, spices, and processed foods.
- Pharma: Easier market entry for Indian pharmaceutical companies.
4. Electric & Hybrid Vehicles
- Access: Preferential quota system for EV and hybrid vehicles, benefiting companies like Tata Motors and Mahindra Electric.
5. Professionals & Skilled Workers
- Visa: Streamlined process for Indian professionals and social security exemptions, saving significant costs annually.
Key Takeaways for Competitive Exams
- India-UK FTA signed in July 2025 brings cheaper imports and enhanced exports.
- Reduction in tariffs for Scotch whisky, luxury cars, chocolates, and medical devices benefits consumers.
- Various sectors in India, including textiles, gems, pharma, and electric vehicles, stand to gain from the agreement.
