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www.newsindiatimes.com – that’s all you need to know Britain And India Sign Free Trade Pact During Modi Visit B ritain and India signed a free trade agreement on Thursday during a visit by Indian Prime Minister Narendra Modi, sealing a deal to cut tariffs on goods from textiles to whisky and cars and allow more market access for businesses. The two countries concluded talks on the trade pact in May after three years of stop-start negotiations, with both sides hastening efforts to clinch a deal in the shadow of tariff turmoil unleashed by U.S. President Donald Trump. The agreement between the world’s fifth and sixth larg- est economies aims to increase bilateral trade by a further 25.5 billion pounds ($34 billion) by 2040. It is Britain’s biggest trade deal since it left the Europe- an Union in 2020, although its impact will be a fraction of the effect of leaving the orbit of its closest trading partner. For India, it represents its biggest strategic partnership with an advanced economy, and one which could provide a template for a long mooted deal with the EU as well as talks with other regions. It will take effect after a ratification process, likely within a year. British Prime Minister Keir Starmer said the deal would bring “huge benefits” for both countries, making trade cheaper, quicker and easier. “We’ve entered a new global era, and that is one that requires us to step up, not to stand aside… by building deeper partnerships and alliances,” Starmer said. Modi said the visit would “go a long way in advancing the economic partnership between our nations”. They also agreed a partnership covering areas such as defence and climate, and said they would strengthen co- operation on tackling crime. WHISKY, CARS Under the trade agreement, tariffs on Scotch whisky will drop to 75% from 150% immediately, and then slide to 40% over the next decade, according to the British government. On cars, India will cut duties to 10% from over 100% under a quota system that will be gradually liberalised. In return, Indian manufacturers will gain access to the UK market for electric and hybrid vehicles, also under a quota system. The ministry has said 99% of Indian exports to Britain would benefit from zero duties under the deal, including textiles, while Britain will see reductions on 90% of its tariff lines, with the average tariff UK firms face dropping to 3% from 15%. While it is Britain’s biggest deal since Brexit, the pro- jected boost to British economic output, of 4.8 billion pounds a year by 2040, is small compared to the country’s gross domestic product of 2.6 trillion pounds in 2024. The Office for Budget Responsibility (OBR) has fore- cast that UK exports and imports will be about 15% lower in the long run compared with if Britain had stayed in the EU. In its first year in power, Britain’s Labour govern- ment has launched a reset of ties with the EU in order to smooth trade friction, while also clinching some tariff relief from the United States and the India trade deal. “In an era of rising protectionism, today’s announce- ment sends a powerful signal that the UK is open for business,” said Rain Newton-Smith, the chief executive of the Confederation of British Industry. The India deal will also facilitate easier access for temporary business visitors, though visas are not cov- ered. Britain and India also agreed to ensure workers no longer have to make social security contributions in both India and Britain during temporary postings in the other country. Under the trade deal, British firms will be able to ac- cess India’s procurement market for projects in sectors such as clean energy, and it also covers services sectors such as insurance. India didn’t succeed in its efforts to get an exemption from Britain’s Carbon Border Adjustment Mechanism (CBAM) – which could levy higher taxes on polluters from 2027 – as part of the deal. Meanwhile talks over a separate bilateral investment treaty are continuing.. - Reuters By Alistair Smout and Manoj Kumar PHOTO:Kin Cheung/Poolvia REUTERS Britain’s Prime Minister Keir Starmer and Prime Minister Narendra Modi of India pose for a photo after Britain’s Secretary of State for Business and Trade, Jonathan Reynolds and Piyush Goyal, Minister of Industry and Supply of India, signed a free trade agreement at Chequers near Aylesbury, England, Thursday, July 24, 2025. Factbox-Key Wins From UK-India Trade Deal – Investments, Jobs, Exports Britain and India signed a landmark free trade agreement on Thursday dur- ing a visit to the UK by Prime Minister Narendra Modi, sealing a deal to cut tariffs on goods from textiles to whisky and cars and allow more market access for businesses. Here are the key points of the agree- ment: TARIFF CUTS India to reduce tariffs on nearly 90% of UK goods. Whisky and gin levy to fall from 150% to 75%, then to 40% in a decade. Automobile tariff to fall from 100%- plus to 10% under quota. Tariffs to be cut on other goods including cosmetics, medical devices, salmon, chocolates, biscuits. UK to offer duty-free access to 99% of Indian items, according to Indian com- merce ministry, covering nearly 100% of trade value. India’s average tariff on UK goods will fall from 15% to 3%. Key reductions include: *Aerospace: From 11% to 0% BENEFITS FOR INDIAN SECTORS Duty-free access for about 99% of Indian exports could unlock $23 billion in new opportunities, said Piyush Goyal, India’s trade minister. Indian exports such as textiles, foot- wear, gems and jewellery, furniture, auto components, chemicals, machinery, sports goods and other items likely to have zero duties, down from current levels of 4%-16% in the UK. Indian farmers to get access to the UK’s $37.5 billion market. INVESTMENTS, GDP IMPACT Nearly £6 billion in investments and export wins announced. UK GDP projected to rise by £4.8 bil- lion a year. UK consumers to benefit from cheaper Indian garments, footwear and food items. MAJOR BUSINESS WINS Airbus and Rolls-Royce: Over £5 billion in aircraft contracts with Indian carriers. Carbon Clean: £7.6 million invest- ment in Mumbai innovation centre. Zerowatt Energy – £10 million invest- ment to set up a UK headquarters. SERVICES UK to allow temporary stay of Indian business visitors and contractual service providers, yoga instructors, chefs and musicians. Nearly 75,000 Indian workers to be exempted from paying social security contributions in the UK for three years. PUBLIC PROCUREMENT UK firms to access India’s non-sensitive federal government tenders above 2 bil- lion rupees. The deal will give UK businesses access to India’s public procurement market, comprising about 40,000 tenders with a value of about 38 billion pounds a year, according to UK government estimates. INDIAN FIRMS TO BENEFIT Indian textile and apparel manufactur- ers such asWelspun India, Arvind Ltd, Raymond, Vardhman likely to benefit from duty-free access for exports to the UK. Footwear manufacturers such as Bata India, Relaxo, auto manufacturers like Tata Motors, Mahindra Electric and also Bharat Forge could benefit, according to industry analysts. UK COMPANIES TO GAIN UK firms including whisky distiller Diageo, auto manufacturer Aston Martin and Tata-owned Jaguar Land Rover could benefit from access to fast-growing Indian market. STRATEGIC PARTNERSHIP To ramp up joint efforts against organ- ised crime, illegal migration, and agree- ment on framework for a criminal records sharing agreement. Sensitive items such as dairy, apples, and edible oils excluded from tariff cuts. - Reuters By Manoj Kumar and Alistair Smout PHOTO:Kin Cheung/Poolvia REUTERS Britain’s Prime Minister Keir Starmer and Prime Minister Narendra Modi of India walk on the ground at Chequers near Aylesbury, England, Thursday, July 24, 2025. Special Report: UK-India News India Times (July 26, 2025 - August 1, 2025) August 1, 2025 5