Cabinet okays India-UK free trade deal ahead of PM Modi's visit

Modi's four-day visit to the United Kingdom and the Maldives begins Wednesday.

The Union Cabinet on July 22 approved the free trade deal with the UK, expected to be signed in London on July 24 during Prime Minister Narendra Modi's visit.

The deal, official referred to as comprehensive economic and trade agreement, will be signed during PM Modi's meeting with British counterpart Keir Starmer.

Modi's four-day visit to the United Kingdom and the Maldives begins on July 23 and will be accompanied by Union commerce and industry minister Piyush Goyal, PTI said citing sources.

The conclusion of the talks for the trade deal was announced by the two countries on May 6.

The trade pact proposes to remove taxes on the export of labour-intensive products such as leather, footwear and clothing, while making imports of whisky and cars from Britain cheaper, in a bid to double trade between the two economies to $120 billion by 2030.

The pact has chapters on issues including goods, services, innovation, government procurement, and intellectual property rights.

The text of the agreement is generally signed by the commerce ministers from both countries.

Once the free trade agreement is signed, it will require approval from the British Parliament before it can take effect.

The two countries have also concluded the negotiations for the Double Contribution Convention Agreement, or social security pact. It would help avoid double contribution to social security funds by Indian professionals working for a limited period in Britain.

However, the talks for the bilateral investment treaty (BIT) are still going on.

The FTA comes into force after signing and ratification by both the countries.

In such trade agreements, two countries either eliminate or significantly reduce customs duties on maximum goods traded between them. They also ease norms for promoting trade in services and bilateral investments.

India's exports to the UK rose by 12.6 percent to $14.5 billion, while imports grew by 2.3 percent to $8.6 billion in 2024-25.

The bilateral trade between India and the UK increased to $21.34 billion in 2023-24 from $20.36 billion in 2022-23.