Following over three years of negotiations, Prime Ministers Narendra Modi and Keir Starmer officially signed the IndiaโUK Free Trade Agreement (FTA) on July 24, 2025, marking the most significant bilateral trade deal for both nations since the UK left the EU. The agreement aims to boost trade by approximately ยฃ25.5 billion (about $34 billion) a year by 2040 and unlock new economic opportunities across sectors
Massive Tariff Reductions on Both Sides
- For UK exports to India: Average tariffs slashed from 15% to 3%, with steep cuts on whisky, gin, automobiles, and medical devices. Whisky duties will fall from 150% to 75% immediately and to 40% over 10 years. Auto tariffs drop from over 100% to 10% under a phased quota.
- For Indian exports to the UK: Zero duties on 99% of Indian goods, including textiles, footwear, gems & jewellery, marine products, engineering goods, pharma, and software services.
Key Provisions & Sector Impacts
- Services & Mobility: Enhanced access for professionalsโbusiness visitors, intra-corporate transfers, chefs, yoga instructorsโalongside a Double Contribution Convention eliminating dual social security payments for up to three years.
- Strategic Collaboration: The deal forms part of the broader โVision 2035โ roadmap, expanding collaboration in defence, education, climate, innovation, and technology.
- Future Growth Areas: Agriculture, clean energy procurement, digital trade, pharmaceuticals, autos, and professional services are poised for new access and market depth
Economic Upside for Business and Jobs
- British benefits: The FTA is expected to add ยฃ4.8 billion annually to the UK GDP, boost wages by ยฃ2.2 billion per year, and unlock ยฃ6 billion in trade and investment deals.
- Indian gains: Estimated to double bilateral trade from ~$60 billion to upwards of $120 billion by 2030, supporting MSMEs, farmers, and services exporters.The Times of India
Next Steps & Implementation
- Legal review and parliamentary ratification: Expected within 9 to 12 months; India and the UK are in the process of final formal approvals. Deal implementation will be phased over a decade.
Why the Agreement Matters
- First-ever comprehensive FTA between India and a European country, marking a shift in Indiaโs trade diversification strategy.
- Balanced structure: Equitable benefits for both economies with high-value items in focus.
- Strategic and symbolic value: Reinforces IndiaโUK relations while setting a blueprint for future trade deals.
โ Final Outlook
The IndiaโUK Free Trade Agreement, signed on July 24, 2025, represents a historic moment in bilateral cooperation. With sweeping tariff cuts, expanded service access, and strategic sector collaboration, the FTA lays the groundwork for a robust economic partnership. It promises to catalyze trade growth toward $120โฏbillion by 2030 and deepen ties beyond commerceโushering in an era of shared prosperity and global competitiveness.
