NEW DELHI: Indian Prime Minister Narendra Modi signed on Thursday a long-awaited free trade agreement with the UK, which will see tariffs cut on goods and increase market access for both countries.

Modi arrived in London on Wednesday evening to meet his British counterpart Keir Starmer and witness the official signing of the deal by India’s Commerce Minister Piyush Goyal and UK Business Secretary Jonathan Reynolds in the Great Hall of Chequers in Aylesbury.

“This agreement is not merely an economic partnership, but a plan for shared prosperity. On one hand, Indian textiles, footwear, gems and jewelry, seafood and engineering goods will get better market access in the UK. New opportunities will be created in the UK market for India’s agriculture produce and processed food industry,” Modi said during a joint press conference with Starmer.

“For India’s youth, farmers, fishermen, and the MSME sector, this agreement will prove especially beneficial. On the other hand, for the people and industry of India, products made in the UK, such as medical devices and aerospace parts, will become available at accessible and affordable prices.”

A deal-in-principle was announced by Modi and Starmer in late May.

Launched in January 2022, the FTA negotiations between India and the UK were set to conclude the same year, but despite more than a dozen formal rounds, talks have stalled over issues such as tariffs, rules of origin and mobility for services professionals.

Under the new pact, about 99 percent of Indian goods will get duty-free access to the UK market.

It will also halve import duties on UK-produced whiskey and gin from 150 percent, followed by a further decrease to 40 percent in a decade. Tariffs on automobiles will be reduced from 100 percent to 10 percent.

The services part of the deal eases the movement of professionals — from independent practitioners such as yoga instructors, musicians and chefs, to business visitors, investors, contractual service providers and intra-corporate transferees. It also extends work and residence rights to their partners and dependent children

While the pact’s opponents cited concerns that it could undercut British workers, Starmer said after its signing that it “will bring huge benefits to both of our countries, boosting wages, raising living standards and putting more money in the pockets of working people” and that it “is good for jobs, it is good for business, putting tariffs and making trade cheaper, quicker and easier.”

Current bilateral India-UK trade stands at about $54 billion, according to UK Department for Business and Trade data, with UK exports to India estimated at $21.7 billion and imports at $32.4 billion.

Anupam Manur, professor of economics at the Takshashila Institution, told Arab News that the FTA is expected to increase it by more than 60 percent in the next decade.

“The free trade deal with the UK is extremely significant for India, which would result in a $34 billion boost in bilateral trade,” he said.

“From India’s point of view, it stands to gain on both counts; greater choice of products at lower prices due to lower import rates, and free market access to a large, advanced economy.”

India has free trade agreements with more than 10 countries, including Comprehensive Economic Partnership Agreements with South Korea, Japan and the UAE.

It is also in talks with the EU to conclude an FTA by the end of 2025, and with Australia, with an interim deal signed in 2022 and a full one under negotiation.

At the same time, the US is threatening tariffs on India; it wants broader access to several key sectors, including agriculture, automobiles, steel and aluminium — a concession New Delhi resists. Without a deal, Indian exports could face a 26-27 percent “reciprocal” tariff imposed by President Donald Trump’s administration, starting Aug. 1.

“The trade deal with the UK eases the pressure on the Indian side to sign a hastily negotiated deal with the US ... This also acts as a template for how a good trade deal is done without looming deadlines and threats,” Manur said.

“A trade deal with the UK, Australia and the EU will signal to the US administration that India is not desperate for a deal, but will instead negotiate on its own terms.”