Published by Global Banking & Finance Review®
Posted on July 18, 2025
3 min readLast updated: January 22, 2026
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UK and India are set to finalize a trade deal next week, enhancing trade in whisky, EVs, and textiles, with significant tariff reductions.
By Manoj Kumar and Alistair Smout
NEW DELHI/LONDON (Reuters) -India and Britain are expected to seal a long-awaited free trade deal next week, two Indian government sources said, granting Indian textiles and electric vehicles some duty-free access to the UK market and easing British exports of whisky, cars and food.
In May, both countries announced the conclusion of trade negotiations after three years of stop-start negotiations, aiming to increase bilateral trade, remove trade barriers and allow duty-free entry of goods.
The countries are now preparing to formally sign the agreement, and the announcement could coincide with Indian Prime Minister Narendra Modi's expected visit to London next week, one of the Indian officials said.
The trade pact will take effect in about a year, after it is approved by the British parliament and India's federal cabinet, the official added.
Officials spoke on the condition of anonymity as the details are not public.
"The trade agreement offers a win-win for both countries," the second Indian source said, adding that Indian consumers would gain access to Scotch whisky at lower prices, as import tariffs will drop to 75% from 150% immediately, and further to 40% over the next decade.
On cars, India will cut duties to 10% from 100% under a quota system that will be gradually liberalised, the sources said. In return, Indian manufacturers are expected to gain access to the UK market for electric and hybrid vehicles, also under a quota regime, they added.
India's commerce ministry did not immediately respond to an emailed request for comment. Britain's trade ministry said that the countries were working to finalise 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.
India's trade ministry has said 99% of Indian exports to Britain would benefit from zero duty under the deal, including textiles, while Britain will see reductions on 90% of its tariff lines.
An Indian trade delegation is separately holding talks in Washington, for a potential trade deal with the U.S. as President Donald Trump ramps up his trade war with the threat of sharply higher tariffs from August 1.
By 2030, India’s middle class is projected to reach 60 million people and could rise to a quarter of a billion by 2050, according to British government estimates. India's overall import demand is forecast to grow by 144% in real terms to 1.4 trillion pounds ($1.88 trillion) by 2035, compared to 2021.
($1 = 0.7434 pounds)
(Reporting by Manoj Kumar and Alistair Smount; Editing by Susan Fenton)
India and Britain are expected to finalize a free trade deal that will enhance bilateral trade and reduce trade barriers, allowing for duty-free entry of various goods.
The trade pact will benefit Indian textiles and electric vehicles, with Indian consumers gaining access to Scotch whisky at lower prices due to reduced import tariffs.
The trade agreement is expected to take effect in about a year, pending approval from the British parliament and India's federal cabinet.
Under the deal, India will reduce duties on cars from 100% to 10% under a quota system that will be gradually liberalized.
According to India's trade ministry, 99% of Indian exports to Britain will benefit from zero duty under the trade deal.
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