Negotiations for the India-UK Free Trade Agreement have concluded, but the FTA will not take immediate effect due to procedural formalities. The legal scrubbing process is underway to ensure legal clarity before the agreement is publicly released. This FTA is seen as a strategic economic partnership between the two nations, reflecting their deepening relationship beyond trade.
India has agreed to reduce tariffs on spirits and automobiles, aiming to benefit consumers and open new doors for Indian manufacturers in overseas markets. The duty on Scotch whisky will be gradually reduced over the next 10 years, while the duty on automobiles will be cut over a few years after the FTA takes effect. Only futuristic vehicles will be allowed to be imported into India to protect domestic manufacturers.
The UK has eliminated tariffs on 99% of its exports to India, with the goal of doubling bilateral trade to $120 billion by 2030. The FTA will be ratified by the UK Parliament and through a Union cabinet meeting in India before coming into effect.
On the other hand, the UK has deferred the implementation of its proposed carbon border adjustment mechanism, known as carbon tax, in response to India’s objections. A mutual understanding on climate-related trade rules is likely to set aside the carbon tax issue for now. Export promotion councils have praised the agreement, anticipating increased employment opportunities and business growth in the UK market.
The India-UK FTA encompasses goods, services, investments, and sustainability issues, with a total of 26 negotiated chapters. Its finalization was announced in May, marking a significant milestone in the two countries’ economic partnership.
