India and the United Kingdom have officially signed a free trade agreement, reducing tariffs on each other and expanding business access

India and the United Kingdom have officially signed a free trade agreement, reducing tariffs on goods ranging from textiles to whisky and automobiles, and expanding market access for enterprises of both countries.

Reuters reported that Indian Prime Minister Modi signed the free trade agreement with British Prime Minister Stammer on Thursday (July 24), planning to increase bilateral trade by another 25.5 billion pounds by 2040.

This is the largest trade agreement signed by the UK since it left the European Union in 2020. For India, this marks the largest strategic partnership it has established with a developed economy, which can provide a template for New Delhi to reach a long-term agreement with the European Union and for negotiations with other regions.

Under the shadow of the tariff policy of the Trump administration in the United States, India and the United Kingdom completed the negotiations on a free trade agreement in May this year. The agreement may come into effect within one year after being approved through the prescribed procedures.

According to the agreement, 99% of goods exported from India to the UK will be subject to zero tariffs. Among the goods exported from the UK to India, 90% of the tariff rates have been reduced, and 85% of the goods will achieve zero tariffs within 10 years. The average tariff faced by British enterprises in India has dropped from 15% to 3%.

Stammer said that this agreement could bring huge benefits to both countries, making trade cheaper, faster and easier.

Modi said that this visit to the UK has greatly promoted the economic partnership between India and the UK.

The British government said that according to the free trade agreement between the two countries, the tariff on Scotch whisky will be immediately reduced from 150% to 75% and to 40% within the next ten years. In terms of automobiles, India will lower tariffs from over 100% to 10% based on the quota system, and then gradually relax them.

Indian manufacturers have been allowed to enter the UK's electric vehicle and hybrid vehicle markets, but they still follow the quota system.

It is expected that by 2024, the India-UK Free Trade Agreement will boost the UK's annual economic output by 4.8 billion pounds. However, the Office for Budget Responsibility of the UK predicts that compared with the UK remaining in the EU, the UK's imports will decline by about 15% in the long term.