India and the United Kingdom are expected to formally sign a long-awaited free trade agreement next week, two Indian government sources said, unlocking mutual market access for key sectors such as electric vehicles, whisky, textiles, and automobiles.
The deal, which follows three years of intermittent talks, will be signed during Indian Prime Minister Narendra Modi’s anticipated visit to London, one of the officials said. The agreement will come into effect around a year after it gains approval from the British parliament and India’s federal cabinet.
“The trade agreement offers a win-win for both countries,” one of the sources said, noting that Indian consumers would see immediate tariff reductions on Scotch whisky and vehicles. Import duties on Scotch whisky will fall from 150% to 75% immediately and further to 40% over a ten-year period. Car tariffs will also drop to 10% from the current 100% under a controlled quota system that will be gradually liberalized.
In return, Indian electric and hybrid vehicles will receive increased access to the UK market under a similar quota-based system. The agreement is also expected to allow duty-free entry for 99% of Indian exports to the UK, including key goods such as textiles. Britain, in turn, will see tariff reductions on 90% of its exports to India.
The UK’s trade ministry confirmed that both governments are working toward finalizing the deal. “We have been working with India on a landmark trade deal that will deliver for British people and business,” a UK government spokesperson said.
The deal reflects broader trade ambitions for both countries. India is also conducting parallel discussions with the United States, with a delegation in Washington exploring a potential agreement. Meanwhile, the UK is seeking to deepen trade ties with fast-growing economies in Asia post-Brexit.
India’s import demand is projected to grow substantially, reaching £1.4 trillion ($1.88 trillion) by 2035, a 144% increase from 2021, according to British government estimates. By 2030, India’s middle class is expected to reach 60 million people, potentially expanding to 250 million by 2050.