Cabinet Approves India-UK Free Trade Agreement

The Indian cabinet has given its approval for a significant free trade agreement with the United Kingdom, set to be signed in London on July 24. This development comes as part of Prime Minister Narendra Modi’s upcoming visit to the UK, where he will be accompanied by Commerce and Industry Minister Piyush Goyal. The agreement, known as the Comprehensive Economic and Trade Agreement, marks a pivotal moment in strengthening economic ties between the two nations.

Key Features of the Trade Pact

The trade agreement aims to eliminate taxes on exports of labor-intensive products such as leather, footwear, and clothing from India. In return, it will make imports of whisky and cars from Britain more affordable. This strategic move is designed to double the trade volume between India and the UK to USD 120 billion by 2030. The pact includes chapters on goods, services, innovation, government procurement, and intellectual property rights, reflecting a comprehensive approach to enhancing bilateral trade.

Approval Process and Future Implications

Once signed by the commerce ministers of both countries, the agreement will require ratification by the British Parliament before it can be implemented. The two countries have also finalized negotiations for a Double Contribution Convention Agreement, which will prevent double contributions to social security funds by Indian professionals working temporarily in the UK. However, discussions on a bilateral investment treaty are still ongoing.

Impact on Bilateral Trade

The free trade agreement is expected to significantly boost trade relations between India and the UK. In 2023-24, bilateral trade increased to USD 21.34 billion from USD 20.36 billion in the previous year. India’s exports to the UK rose by 12.6% to USD 14.5 billion, while imports grew by 2.3% to USD 8.6 billion in 2024-25. By reducing customs duties and easing norms for services and investments, the agreement aims to further enhance these figures.