Historic Trade Agreement Set for Signing

Prime Minister Narendra Modi has arrived in the United Kingdom, where a landmark free trade agreement between India and the UK is expected to be signed. Accompanying him is Commerce and Industry Minister Piyush Goyal. This agreement marks a significant milestone in the bilateral relations between the two nations, following three years of negotiations that concluded on May 6.

Key Provisions of the Trade Deal

The trade agreement aims to eliminate taxes on Indian exports of labor-intensive products such as leather, footwear, and clothing. In return, it will reduce costs for importing British whisky and cars into India. This strategic move is designed to double the trade volume between India and the UK to USD 120 billion by 2030.

Approval Process and Economic Impact

Once signed by the commerce ministers of both countries, the agreement will need approval from the British Parliament. The Indian cabinet has already given its consent. Britain stands as the sixth-largest investor in India, with investments totaling approximately $36 billion. The presence of 1,000 Indian companies in the UK, employing 100,000 people and investing $2 billion, underscores the economic interdependence of the two nations.

Duty-Free Access and Social Security Exemptions

The agreement will grant 99% of Indian products duty-free access to the UK market, covering nearly all current trade value. Additionally, a double contribution convention has been established, exempting employers of Indian workers from paying social security contributions in the UK.

Trade Growth and Future Prospects

India’s exports to the UK increased by 12.6% to $14.5 billion, while imports rose by 2.3% to $8.6 billion in 2024-25. Bilateral trade grew from $20.36 billion in 2022-23 to $21.34 billion in 2023-24. Following his UK visit, PM Modi will travel to the Maldives at President Mohamed Muizzu’s invitation, signaling a potential thaw in relations after a period of tension.