UK-India $34 Billion Free Trade Deal Includes 3-Year National Insurance Exemption and Scotch Whisky Tariff Cuts

The United Kingdom and India have finalized a free trade agreement (FTA) after more than three years of negotiations, marking a major post-Brexit milestone for Britain and a significant advancement for India's global trade ambitions. The deal, valued at approximately $34 billion annually, aims to boost bilateral trade and offers nearly tariff-free access for Indian exports to the UK, benefiting sectors such as textiles, pharmaceuticals, gems and jewellery, auto, infrastructure, agriculture, and footwear. A notable feature of the agreement is the exemption of Indian nationals working temporarily in the UK from paying National Insurance contributions for up to three years, including a waiver of the 13.8% employer contribution. This provision has sparked criticism and debate in the UK, with opponents arguing it creates a two-tier tax system that could undercut British workers, while government officials, including Business Secretary Jonathan Reynolds, have defended the deal, asserting it will not disadvantage British workers. The agreement also includes a phased reduction in tariffs on UK imports to India, notably halving the import duty on Scotch whisky to 75% initially and then to 40% over ten years, which is expected to boost exports and foreign direct investment in premium brands. The deal excludes market access for certain Indian products such as smartphones and small electric vehicles, providing protections for domestic industries. Implementation of the FTA is expected to take around three months, pending legal checks, signing, and ratification. The pact is seen as a potential model for India's ongoing trade negotiations with other major partners like the US and the EU.