The Union cabinet led by Prime Minister Narendra Modi on Tuesday approved the India-UK free trade agreement, paving the way for the much-awaited formal signing of the pact during Modi’s visit to London on 24 July, said two government officials, asking not to be identified.
The agreement, aimed at boosting goods and services trade between the two countries, will be signed by commerce minister Piyush Goyal and his British counterpart Jonathan Reynolds in the presence of Modi and British prime minister Keir Starmer, as per the first official, who is involved in preparations for the signing ceremony.
Modi begins a four-day trip on Wednesday that will take him to the UK and the Maldives, with the signing of the free trade agreement (FTA) in London expected to be a key highlight. India and the UK had concluded negotiations for the deal on 6 May after more than two years of talks.
The FTA—formally known as the Comprehensive Economic and Trade Agreement—seeks to double bilateral trade to $120 billion by 2030 by eliminating or significantly reducing customs duties on a wide range of products.
India is set to benefit from a zero-duty regime for crucial labour-intensive exports such as textiles, leather goods, and footwear, while the UK will see tariff reductions on luxury items such as Scotch whisky and premium cars.
UK Parliament must ratify
The pact, which also includes chapters on services, innovation, government procurement, intellectual property rights and anti-corruption, will come into effect after it is ratified by the UK Parliament, which may take another six months.
As per practice, the agreement will be signed by the commerce ministers of both countries, but officials said the Prime Minister’s presence will add political significance to the event.
The pact will mark India’s first major bilateral trade agreement with a developed Western economy since the Modi government accelerated its FTA agenda — part of a wider strategy to diversify export markets and attract investments.
“This deal has a strategic significance beyond trade, especially at a time when India is recalibrating its global economic partnerships and the talks with US for a bilateral trade agreement is in progress,” said the first officials, who was involved in the talks.
Separately, India and the UK have also concluded negotiations on a social security agreement—called the Double Contribution Convention—that will allow Indian professionals working in Britain on short-term assignments to avoid paying into both countries’ social security systems.
The FTA does not include the Carbon Border Adjustment Mechanism (CBAM) —the so-called carbon tax—at this stage, but both officials said it will be taken up for discussions later.
India’s merchandise exports to the UK rose 12.6% to $14.5 billion in 2024-25, while imports grew marginally by 2.3% to $8.6 billion. The total bilateral trade stood at $21.34 billion in 2023-24, up from $20.36 billion in the previous year.
Source: Livemint
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