India-UK Free Trade Agreement Takes Effect Today, Prices to Drop on Luxury Cars and Whisky
Summary
Editorially reviewed.
- The free trade agreement (FTA) between India and the UK takes effect today, expected to double bilateral trade to $120 billion by 2030.
- Under the agreement, 99 percent of Indian goods will enter the UK market tariff-free, while prices of luxury cars and spirits in India are anticipated to decrease.
- Indian industries including textiles, pharmaceuticals, and agriculture will gain new markets, while UK firms plan to increase investments in green energy and information technology.
June 14, Kathmandu – The India-UK Free Trade Agreement (FTA) has come into force today.
Following its implementation, 99% of Indian goods will be exported to the UK market free of customs duties, whereas the majority of goods imported from the UK will face an average customs tariff of 3% in India.
This is expected to lower prices in India for products such as Scotch whisky, gin, luxury cars like Jaguar Land Rover and Rolls-Royce, branded apparel, cosmetics, and certain food items.
Duties on Scotch whisky have been reduced from 150% to 75%, with plans to bring it down further to 40% within ten years.
Bilateral trade is projected to double, reaching $120 billion by 2030.
India’s Commerce Minister Piyush Goyal and UK Trade Minister Jonathan Reynolds signed the agreement on July 24, 2025, in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer.
UK High Commissioner to India, Lindy Cameron, described this as a ‘historic moment in the modern UK-India partnership’ on social media platform X.
Significant Benefits for Indian Industry
The agreement will greatly benefit sectors such as textiles, home textiles, gems and jewelry, leather goods, engineering materials, auto parts, pharmaceuticals, and agricultural products.
The UK has eliminated customs duties ranging from 8% to 12% on Indian textiles and home textiles, enhancing the competitiveness of Indian products against those from Bangladesh and Vietnam.
Simplified registration processes for Indian generic medicines in the UK are expected to boost pharmaceutical exports. Notable increases are also anticipated in exports of basmati rice, tea, and spices.
Claims of Increased Employment and Investment
The Indian government asserts that the deal will create substantial employment in textile and leather industries, benefiting approximately 60 million micro, small, and medium enterprises with new markets and improved profitability.
UK companies have indicated plans to increase investments in information technology, financial services, green energy, solar energy, green hydrogen, and electric vehicle infrastructure.
India’s Strategic Shift Westward
India has already signed similar free trade agreements with the UAE, Australia, Mauritius, and the European Free Trade Association (EFTA). Negotiations are ongoing with the European Union (EU) and the United States for comparable deals.
According to the Global Trade Research Initiative, India is prioritizing trade expansion with western economies over ASEAN countries, Japan, and South Korea. Experts suggest the deal with the UK will facilitate Indian exports reaching the broader European market.