India and UK Set to Sign Long-Awaited Free Trade Agreement

According to foreign media reports, two Indian government sources revealed that India and the UK are expected to sign a long-awaited free trade agreement this week. Under this agreement, Indian textiles and electric vehicles will receive a degree of duty-free access to the UK market, while the UK will facilitate exports of whisky, cars, and food to India. In May this year, after three years of intermittent negotiations, the two countries announced the conclusion of trade talks aimed at increasing bilateral trade, eliminating trade barriers, and achieving duty-free access for goods to each other's markets. One Indian official stated that the two countries are currently preparing to formally sign the agreement, which is expected to be announced during Indian Prime Minister Modi's visit to London this week. The official added that after obtaining approval from the UK Parliament and the Indian Federal Cabinet, the trade agreement is expected to take effect in about a year. Another Indian source mentioned, "This trade agreement is a win-win for both countries." He stated that Indian consumers will be able to purchase Scotch whisky at lower prices, as the import tariff will be immediately reduced from 150% to 75%, and further to 40% over the next decade. In the automotive sector, India will gradually lower tariffs from 100% to 10% under a phased quota system. In return, the UK will open its market to Indian electric and hybrid vehicles, also implementing a quota management mechanism. The Indian Ministry of Commerce did not immediately respond to email requests for comments on the report. The UK Department for International Trade stated that both countries are working to finalize the agreement. A UK government spokesperson said, "We have been working with India to advance a landmark trade agreement that will benefit the people and businesses of the UK." According to the Indian Ministry of Trade, under the agreement, 99% of Indian exports to the UK will enjoy zero tariffs, including textiles, while 90% of tariffs faced by the UK will also be reduced. The UK government estimates that by 2030, India's middle-class population is expected to reach 60 million and could increase to 250 million by 2050. Compared to 2021, India's overall import demand is expected to grow by 144% in real value by 2035, reaching £1.4 trillion (approximately $1.88 trillion). At the same time as the impending trade agreement between India and the UK, an Indian trade delegation is in Washington discussing potential trade agreements with the US, coinciding with threats from the Trump administration to escalate the trade war, announcing significant tariff increases on imports from multiple countries starting August 1.