India, UK Close To Finalising Free Trade Agreement After Over Three Years Of Talks

India and the United Kingdom are on the verge of concluding a long-awaited free trade agreement (FTA) that is likely to be signed this week, according to two senior Indian government officials. The deal, which has been under negotiation for over three years, is poised to boost bilateral trade by reducing tariffs and easing market access for key sectors in both countries.

The agreement will grant duty-free access for Indian textiles, electric vehicles (EVs) and hybrid vehicles into the UK market, while Britain will benefit from lowered tariffs on whisky, automobiles and various food products. A formal signing is expected to coincide with Indian Prime Minister Narendra Modi’s anticipated visit to London next week. Once signed, the FTA will come into force in about a year, following ratification by India’s federal cabinet and the British Parliament.

“This trade agreement offers a win-win for both countries,” said an Indian official familiar with the negotiations, who declined to be named due to the confidentiality of the discussions.

One of the key highlights for Indian consumers is a significant reduction in import tariffs on Scotch whisky. The current 150% tariff will drop to 75% immediately and further reduce to 40% over a 10-year period. Similarly, India will cut import duties on certain British cars from 100% to 10% under a quota-based system that will gradually expand. In exchange, India will gain preferential access for its EV and hybrid vehicle exports to the UK under a similar quota framework.

The UK government confirmed that talks are in the final stages. “We have been working with India on a landmark trade deal that will deliver for British people and business,” said a spokesperson for the UK Department for Business and Trade.

Under the proposed agreement, nearly 99% of Indian exports to the UK including textiles, will be eligible for zero-duty access. In return, about 90% of British tariff lines will see reductions, offering broader access for UK products in India.

While India’s commerce ministry has not commented publicly, the deal is seen as a strategic move to deepen economic ties ahead of India’s general elections and as part of the UK’s post-Brexit trade strategy.

In parallel, India is also negotiating with the United States amid growing trade tensions, particularly with concerns over potential tariff hikes under U.S. President Donald Trump’s administration from August 1.