Prime Minister Narendra Modi announced on Tuesday the successful conclusion of a historic free trade agreement (ALE) between India and the United Kingdom, calling it a step in the economic partnership of the two countries. The agreement was finalized following a conversation between Prime Minister Modi and British Prime Minister Keir Starmer.
Described as a mutually beneficial and forward pact, the FTA reinforces not only bilateral trade, but also includes a double contribution agreement – a separate social security agreement exempting Indian workers in the United Kingdom from double social security payments for a period of three years.
One of the remarkable features of the FTA is its significant price reductions, in particular the creation of zero-transport access for a wide range of Indian exports to the United Kingdom. This should stimulate the competitiveness of the manufacturing and exports of India, in particular in the highly intensity sectors.
The British government has announced that India would reduce prices on 90% of British imports, 85% of them being without a price over the next ten years.
Reduced prices: alcohol, cars among the winning keys in the United Kingdom
The prices on whiskey and the GIN of the imported United Kingdom, currently at 150%, will be divided by two to 75% immediately and still reduced to 40% by the tenth year of the agreement.
Automobile imports from the United Kingdom, which attract more than 100%, will be reduced to 10% as part of a quota-based system.
These discounts should give a major advantage to the prices of Scottish whiskeys and cars made in the United Kingdom on the Indian market. However, this decision could intensify competition for Indian alcohol companies, in particular in the Premium Alcubev segment, where local brands have recently expanded their global ambitions.
“Although the Details of the ALE are always expected, according to the information we have collected, it seems that the government has not fully respected the pleadings of the Indian alcoholic drinks industry. We have always asked for a range of Player for Indian actors. We only hope that the government has included in the FTA the MIP (minimum import price) which will prevent access to the Indian alcoholic. Department reduction is followed for trade in agreements with the EU, the United States and other nations that produce spirits and wines, then the Indian alcohol industry, including the wine sector, could have a negative impact, “said Aant S Iyer, director general, confederation of Indian alcoholic drinks companies.
He added: “The government seeks to reach a billion dollars to exports from the Indian Alcubev industry by 2030. However, without guaranteeing appropriate access on the market, in particular to Western nations, it will be difficult to achieve the export objective. Although other sectors can benefit from the EFT, the Indian Indian industry is looking for a similar advantage. export.
Zero right out of 99% of Indian export lines
The FTA offers unprecedented market access to Indian exporters. More than 99% of India’s pricing lines will benefit from zero duty in the United Kingdom, covering almost 100% of the commercial value. This should considerably increase India exports through agriculture, processed foods and industrial goods.
📦 Key product categories by accessing zero-service in the United Kingdom
| Category | Range of pre-fta rights | Ale price result |
|---|---|---|
| Animal products | Up to 20% | 99.3% of zero price lines |
| Vegetable / oil products | Up to 20% | 99.8% of zero price lines |
| Transformed food | Up to 70% | 99.7% of zero price lines |
| Minerals | Up to 8% | Notoriety |
| Chemicals | Up to 8% | Notoriety |
| Plastic / rubber | Up to 6% | Notoriety |
| Leather / shoes | Up to 16% | Notoriety |
| Wood / paper | Up to 10% | Notoriety |
| Textile / Clothing | Up to 12% | Notoriety |
| Helmet / glass / ceramic | Up to 12% | Notoriety |
| Gems and jewelry | Up to 4% | Notoriety |
| Basic metals | Up to 10% | Notoriety |
| Mechanical machinery | Up to 8% | Notoriety |
| Electric machines | Up to 14% | Notoriety |
| Transport / auto components | Up to 18% | Notoriety |
| Instruments / Clocks | Up to 6% | Notoriety |
| Weapons and ammunition | Up to 2% | Notoriety |
| Sports furniture / products | Up to 4% | Notoriety |
| Works of art | 0% | Notoriety |
What does this mean for India
This radical elimination of import duties on Indian goods from India, India, more deeply integrated into the United Kingdom and world supply chains. It will be a major boost for MPMs, job creation and sectoral competitiveness, in particular in segments such as textiles, shoes, food processing, engineering products and gems and jewelry.
The FTA establishes a new reference for future trade agreements, mixing economic diplomacy with strategic ambition, while strengthening the position of India as a global trading partner.
The president of Assocham, Sanjay Nayar, said: “Assocham, on behalf of the Indian industry, congratulates Prime Minister Modi for his leadership in the conclusion of a trade agreement breaking the way with the United Kingdom. This free trade agreement of India-UK and the Double Contribution Convention is a win-win for the two nations and will deepen our full strategic partner Investment, trade, investment, innovation and health creation.
The two countries are also pursuing individual agreements with the United States to eliminate some of the prices implemented by US President Donald Trump, who disrupted the global trade system. Consequently, the emphasis is increased in London and New Delhi on the finalization of a trade agreement between the United Kingdom and India.
