Free Trade Agreement will make British whisky, cars cheaper in India

India and the UK on Tuesday announced conclusion of the free trade agreement which will make British Scotch whisky and cars cheaper in India, while reducing duties on Indian imports such as garments and leather products here.

The announcement regarding the conclusion of talks was made by Prime Minister Keir Starmer and his Indian counterpart Narendra Modi.

The two sides also announced closing of talks for the Double Contribution Convention Agreement. However, talks on the proposed bilateral investment treaty between the two countries are still on.

As per the agreement, India will reduce duty on UK whisky and gin from 150 per cent to 75 per cent and further to 40 per cent in the tenth year of the deal. The tariffs on automotive will go down from over 100 per cent at present to 10 per cent, subject to a quota.

Further, India will gain from tariff elimination on about 99 per cent of the tariff lines (or product categories) covering almost 100 per cent of the trade value offering huge opportunities for increase in the bilateral trade between India and the UK.

The FTA is expected to double bilateral trade by 2030. It is also expected to add GBP 4.8 billion annually to the British economy by 2040, according to official estimates.

“In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention," Modi said in a post on X.

“I look forward to welcoming PM Starmer to India soon," he said.

Describing it as a “historic" deal, Starmer said in a statement that it is the biggest deal the UK has done since leaving the EU (European Union) and the “most" ambitious India has ever done.

According to the UK Department for Business and Trade (DBT), besides whisky and gin, tariff reductions have also been achieved on products such as medical devices, advanced machinery and lamb.

The FTA is also expected to increase bilateral trade, which stands at GBP 41 billion a year, by an additional GBP 25.5 billion annually, with UK wages up by GBP 2.2 billion each year in the long run.

One of India’s key demands around a Double Contributions Convention pact will ensure that professionals in either country are not forced to pay national insurance or social security contributions in both countries.

On professional visas, the UK stressed that there would be no change to the country’s immigration policy except to offer a more streamlined process for business mobility.

India has also succeeded in adding categories such as chefs, musicians and yogis in the UK’s professional visa routes.

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