Blitz Bureau
In a significant breakthrough amid rising protectionism and tariff-led trade disruptions, India and the United Kingdom have successfully concluded an ambitious Free Trade Agreement (FTA), widely seen as a watershed moment in their bilateral relationship.
Prime Minister Narendra Modi called the deal a “historic milestone” that would deepen the India-UK Comprehensive Strategic Partnership and spur trade, investment, innovation, and job creation in both countries.
Finalised after a phone conversation between Modi and his British counterpart Keir Starmer, the agreement comes three years after both countries first set the goal of concluding an FTA. Originally targeted for October 2022, the talks were delayed by political churn in the UK and disagreements on sensitive issues such as automobile tariffs and alcohol duties.
“Delighted to speak with my friend PM @Keir_Starmer,” Modi said on X. “In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Taxation Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership and catalyse trade, investment, growth, job creation, and innovation in both our economies.”
Landmark agreement signed to take bilateral ties to new level
Both leaders hailed the FTA as opening up new opportunities for business and strengthening economic ties. Starmer said the agreement was consistent with the UK’s “Plan for Change” to build a stronger and more secure economy by fostering global alliances and lowering trade barriers.
The deal is particularly timely. With global supply chains still reeling from geopolitical tensions and multilateral trade negotiations struggling for consensus, this bilateral accord underscores a shared resolve to advance pragmatic economic diplomacy. For India, the FTA is a crucial step in diversifying trade partners and reinforcing its ambition to emerge as a global manufacturing and services hub. For the UK, it is a major stride in its post-Brexit trade strategy, reaffirming its relevance as a global economic player.
According to UK government data, bilateral trade in goods and services was worth £42.6 billion in the four quarters ended Q4 2024 — an 8.3 per cent rise over the previous year. Indian exports to the UK grew by 10.1 per cent to £25.5 billion, while UK exports to India rose 5.8 per cent to £17.1 billion.
The FTA is expected to significantly build on this momentum. For India, the pact creates new opportunities in key sectors such as textiles, pharmaceuticals, and information technology. Indian apparel exporters will gain from tariff reductions that enhance their competitiveness in the UK’s retail market. Indian pharmaceutical companies stand to benefit from provisions easing drug approvals and clarifying intellectual property norms. The services sector, especially IT and consulting, will enjoy enhanced professional mobility, allowing smoother operations in the UK.
India’s food and agri-products, such as tea, spices, and basmati rice, are also expected to see greater retail presence in Britain, while the fast-growing automotive components sector will gain from smoother customs procedures and lower duties, enabling closer integration with the UK’s manufacturing supply chains. These gains directly support India’s “Make in India” campaign and push for supply chain resilience.
For the UK, the deal offers long-awaited tariff reductions on premium alcoholic beverages such as Scotch whisky and wines—longstanding sticking points in the negotiations. British financial and legal service providers will benefit from better market access and fewer regulatory bottlenecks. The agreement is also expected to enhance cooperation in education, with improved mobility for students and professionals and scope for institutional collaboration in digital and vocational learning.
Investment is a key focus. The deal offers regulatory clarity and tax certainty for British firms eyeing India’s expanding markets in clean energy, electric vehicles, and fintech. Indian businesses with operations in the UK will similarly benefit from more predictable rules, lower compliance costs, and improved capital flow frameworks.
The agreement sends a broader message about the value of pragmatic, well-negotiated bilateralism in an age of fractured multilateralism. India’s trade posture since opting out of the RCEP has favoured such targeted arrangements that serve national interests. The UK deal reflects New Delhi’s confidence in engaging in liberalisation—across goods, services, and digital trade—while protecting critical sectors.
Full details of the agreement, including implementation timelines and tariff phase-down schedules, are expected in formal releases from both governments in the coming days. Prime Minister Starmer is also expected to visit India later this year, underlining the deepening relationship.
In a world marked by economic nationalism and fractured alliances, the India–UK FTA stands out as a model of cooperative globalism. More than just a trade deal, it is a strategic move that promises long-term dividends for both economies, bound by democratic values and a shared vision of an open, resilient global order.
