The United Kingdom and India have reached a major milestone—agreeing on 90% of their Free Trade Agreement (FTA). Both parties are hoping to close the deal this year. The historic agreement will drastically cut tariffs on prime UK exports including Scotch whisky and cars, unlocking greater access to one of the world’s fastest-growing economies.
It also opens a new chapter in bilateral ties by enhancing trade, investment, and mobility. One of the key holdouts—mobility visas for Indian professionals—has now been largely addressed, clearing the way for closer cooperation in the services sector.
With simultaneous negotiations going on for a bilateral investment treaty, the FTA is a strategic step for both countries in the face of changing global trade patterns. For the UK, it is a major post-Brexit victory, for India, it is one element of a wider effort to diversify trade partners and enhance economic resilience.
Background
Negotiations started in January 2022. The agreement encompasses 26 chapters on goods, services, investments, and intellectual property. With time, both governments have sought to overcome sticking points. In recent times, common economic objectives and international trade pressures have sped up progress.
The mobility deal, particularly on Indian worker visas, is a significant victory. It should facilitate the movement of professionals and enhance collaboration in services. Tariff reductions are also under the spotlight. India currently has tariffs of as much as 150% on Scotch whisky and 100% on UK-produced cars. The FTA plans to reduce these levels and open up market access for British firms.
Although momentum exists, some issues persist. Whisky tariff reduction timelines remain in contention. Auto tariff negotiations and access to medicines are also being discussed. Both sides anticipate reaching a balance that will suit their domestic sectors.
UK-India Bilateral Investment Pact
Concomitant with the FTA, a bilateral investment agreement is underway. This will provide legal protections for investors on both sides. The aim here is to improve the security and predictability of the investment environment.
This close-to-final deal has broader implications. For the UK, it’s a central element of constructing post-Brexit global trade networks. For India, it’s a move towards diversifying partners in the face of increasing global uncertainty. The action is part of a rising trend—nations moving away from multilateral trade agreements towards targeted bilateral ones.
As the UK and India move toward the completion of their FTA, the stakes are high. The agreement marks increased economic integration and a common vision for growth driven by trade. Though some of the issues persist, both countries seem determined to complete the negotiations and redefine their trade relationship of the future.
