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Critical Topics and Their Significance for the UPSC CSE Examination on May 08, 2025

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Free Trade Agreement

For Preliminary Examination: Current events of national and international Significance

For Mains Examination: GS II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Context:

 INDIA AND THE United Kingdom ironed out major differences during the latest round of talks in April end at London and announced Tuesday the conclusion of the long-awaited Free Trade Agreement.

Read about:

What is the meaning of free trade agreement?

India and the United Kingdom Free Trade Deal

Key takeaways:

• Britain has announced that a new trade agreement with India is projected to enhance annual bilateral trade by £25.5 billion from 2040 onwards. In 2024, the total trade volume between the two nations reached £42.6 billion, with UK exports to India valued at £17.1 billion and imports from India at £25.5 billion. India ranked as the UK’s 11th-largest trading partner that year. The UK described this deal as the “most substantial and economically important” bilateral agreement it has signed since its departure from the European Union in 2020, commonly referred to as Brexit.

• As per a Reuters report, the agreement includes a gradual reduction of import duties on alcoholic beverages such as whisky and gin—from the current 150% to 75%, with a further decrease to 40% by the tenth year. This change is expected to greatly benefit the UK’s Scotch whisky producers and lower prices for consumers in India, the largest market for whisky globally.

• India will also reduce tariffs on automobile imports to 10% under a specified quota, a significant drop from current rates exceeding 100%.

• A Free Trade Agreement (FTA) is a pact between countries that sets the framework to facilitate smoother and more liberalized trade. According to India’s Ministry of Commerce, FTAs aim to substantially reduce or remove both tariff and non-tariff barriers across a wide range of traded goods and services. The UK’s Department for International Trade highlights that such agreements help eliminate trade and investment obstacles, thereby making it easier and more cost-effective for businesses to operate internationally. Additionally, consumers benefit from wider product variety and lower prices