India and the United Kingdom are on the verge of signing a historic Free Trade Agreement (FTA) during Prime Minister Narendra Modi’s visit to the UK, which begins Wednesday.AdvertisementThe deal, officially titled the Comprehensive Economic and Trade Agreement (CEPA), is scheduled to be signed on Thursday in the presence of Prime Minister Modi and his British counterpart Keir Starmer.The Union Cabinet cleared the pact on Tuesday, paving the way for what is being described as a transformative moment in bilateral economic relations. Commerce and Industry Minister Piyush Goyal is also in London to attend the signing ceremony.India and the UK had formally concluded negotiations on the FTA on May 6, 2025, with the final text held back for legal review. The agreement aims to eliminate or reduce tariffs on a vast majority of goods traded between the two nations, making Indian exports more competitive in the UK and vice versa.The FTA is expected to significantly enhance trade volumes, with both countries targeting a bilateral trade value of $120 billion by 2030. Under the deal:India will gain tariff-free or reduced-tariff access for 99% of its exports to the UK, covering nearly 100% of trade value.UK will see tariff reductions on 90% of its exports to India, with 64% benefiting immediately.Indian agriculture and industries set to benefit include textiles, leather, footwear, sports goods, marine products, gems and jewellery, engineering goods, auto parts, and organic chemicals.On the British side, the food and drink sector, especially Scotch whisky and gin, will see significant gains. Currently subject to a 150% import tariff, duties will drop to 75% immediately, and gradually fall to 40% over 10 years.Farmers in focusAgriculture supports over 55% of India’s population and continues to be the backbone of rural livelihoods and economic stability. Recognising this, the Free Trade Agreement (FTA) is designed to promote value addition, enhance global competitiveness, and ensure that the benefits of trade reach rural and marginal farmers.Through improved market access and strategic safeguards, the FTA aims to help Indian agriculture shift from a focus on volume to value, and from serving local markets to competing globally.Services, mobility, and market accessThe agreement also includes wide-ranging commitments on services trade, covering IT, financial services, engineering, architecture, and education. In a major move to ease business movement:Indian professionals will benefit from simplified mobility rules.A three-year exemption from UK social security contributions will apply to temporary Indian workers and their employers, who will now pay into India’s system instead.Concerns over auto importsOne of the more contentious aspects of the deal involves UK automobile exports. Import duties will drop from over 100% to 10% under a tariff-rate quota system, raising concerns within the Indian auto industry and potentially impacting the ‘Make in India’ initiative.Strategic significance and next stepsThe UK government has hailed the deal as a “huge economic win” and a “landmark trade pact,” highlighting India’s potential to become the world’s third-largest economy by 2028. While key trade elements are finalized, discussions continue on a Bilateral Investment Treaty (BIT) and the carbon border tax, the latter being negotiated separately. With inputs from ANI
Who farmers will benefit from historic FTA deal
