UK – India trade deal likely unveil by next week, sources say

By Admin

19 Jul, 2025

India and the United Kingdom are on the cusp of finalizing a significant Free Trade Agreement (FTA) that promises to reshape economic ties between the two nations. Two senior Indian government sources have revealed that the deal long in the making is expected to be officially sealed next week. The announcement could potentially coincide with Indian Prime Minister Narendra Modi’s anticipated visit to London, marking a historic step in trade diplomacy.

A Win-Win Agreement

After three years of intermittent negotiations, both nations announced in May the conclusion of talks for this much-awaited FTA. The agreement is aimed at increasing bilateral trade volumes, removing long-standing barriers, and facilitating duty-free access to a wide range of goods. Once formally signed, the agreement is projected to come into effect within a year, following necessary approvals from the British Parliament and India's federal cabinet.

A senior Indian official called the deal “a win-win for both countries,” emphasizing its potential to enhance market access and consumer choices across industries. The agreement notably grants Indian manufacturers of textiles and electric vehicles some duty-free access to the UK market. In return, British exporters stand to benefit from reduced tariffs on whisky, cars, and various food products.

Key Benefits for Both Nations

• Whisky Tariffs Reduced: One of the most celebrated outcomes of the deal is the phased reduction in import duties on Scotch whisky. Tariffs will drop from 150% to 75% immediately and fall further to 40% over the next ten years, making premium brands more affordable to Indian consumers.
  
  

• Automotive Sector Gains: India will cut import duties on British cars from a steep 100% to just 10%, under a quota system that will become more liberal over time. Meanwhile, Indian electric and hybrid vehicle manufacturers will receive reciprocal access to the UK market, also governed by a quota framework.
  
  

• Textile and Other Indian Exports: India’s trade ministry has stated that 99% of Indian exports to the UK including key sectors like textiles will benefit from zero-duty access. On the British side, the deal will eliminate or reduce tariffs on 90% of its tariff lines.
  
  

Strategic and Economic Implications

This FTA reflects the growing recognition of India’s expanding consumer base and market potential. By 2030, India’s middle class is projected to hit 60 million and could rise to a quarter of a billion by 2050, according to UK government data. Moreover, India's import demand is forecast to grow by 144% in real terms, reaching 1.4 trillion pounds ($1.88 trillion) by 2035.

The trade agreement aligns with broader economic and geopolitical strategies for both countries. For the UK, it represents a key post-Brexit trade success; for India, it marks another stride in its global economic outreach.

Looking Beyond the UK

While preparations for signing the UK deal are underway, Indian trade delegates are simultaneously in Washington exploring a potential trade agreement with the United States. These initiatives signal India’s proactive approach to establishing strong trade linkages with global powers amid evolving economic challenges and opportunities.

As both governments finalize the agreement, anticipation is mounting in the business and policy communities on both sides. If successful, this trade deal could set a precedent for future partnerships between India and other leading economies.