On Wednesday , May 7 , the governments of India and the United Kingdom announced that they had finalized a free trade agreement (FTA) and double taxation convention after three years of negotiations .
British Prime Minister Keith Starmer announced :
” Today we have reached a historic agreement with India – one of the world ‘s fastest growing economies – that will grow the economy and benefit British people and businesses . “
On the other hand , Indian Prime Minister Narendra Modi said in a separate statement :
“In a historic milestone, India and the UK have successfully reached an ambitious and reciprocal free trade agreement and have also finalised a double taxation convention.”
Free Trade Agreement (FTA) details:
- Tariff elimination : Britain will make 99.1 percent of imports from India tariff – free .
- India will also reduce 90 % of UK tariff lines , with 85 % of these tariffs to zero within ten years .
- Increased bilateral trade : The agreement is expected to increase bilateral trade by up to £ 25.5 billion ($34 billion ) .
- Current state of trade: In 2024 , bilateral trade between the two countries reached £ 42.6 billion , an increase of 8.3 % over the previous year .
- The UK has a trade deficit of £ 8.4 billion in goods and services with India .
Double Taxation Convention :
- Under the agreement , Indian workers working temporarily in the UK will be exempt from paying National Insurance for three years .
- Employers of these individuals will also be exempt from paying insurance contributions .
Economic forecasts :
- The Indian government expects the agreement to increase bilateral trade volume to $120 billion by 2030, double the current level.
