In a historic step toward strengthening global trade partnerships, India and the United Kingdom are set to sign a landmark Free Trade Agreement (FTA) today. This comprehensive pact promises to reset bilateral trade ties and boost two-way trade to $100 billion annually within the next five years.
A Game-Changing Trade Deal
Officially named the Comprehensive Economic and Trade Agreement, the FTA will be signed in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer. The signing ceremony will also include Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds.
The deal represents a significant breakthrough after years of negotiation. Once signed, it will undergo ratification in both the Indian and British Parliaments—a process expected to take about a year before full implementation.
What the India-UK FTA Offers
Under the agreement, nearly 90% of UK exports to India—including aerospace parts, Scotch whisky, cosmetics, medical devices, chocolates, and more—will see immediate or phased duty reductions.
Notably:
- Scotch whisky and gin tariffs will drop from 150% to 75% instantly and eventually reduce to 40% over the next decade.
- UK-made cars, currently facing over 100% duty, will see tariffs reduced to just 10%, paving the way for Jaguar and other British auto brands to expand in the Indian market.
Meanwhile, 99% of Indian exports to the UK will benefit from zero or reduced tariffs, giving a huge boost to:
- Textiles and garments
- Footwear and auto components
- Gems, jewellery, and machinery
- Sports goods, chemicals, and furniture
These goods currently face UK tariffs ranging from 4% to 16%, and the FTA will make Indian exports more competitive.
Big Business, Big Numbers
Bilateral trade between India and the UK hit a record $55 billion in 2024, and experts project it to reach $100 billion within five years under the FTA framework.
- Over 1,000 Indian companies operate in the UK, employing more than 100,000 people and generating over $91 billion in turnover.
- The UK hosts about 700 British companies in India, with a combined turnover of $59 billion and employing 500,000+ people.
Investment flows are also robust:
- Indian firms have invested $20 billion (₹1.73 lakh crore) in the UK.
- British investment in India stands at $36 billion (₹3.11 lakh crore), making the UK India’s 6th-largest foreign investor.
Economic Impact for Both Nations
A UK government report estimates that the FTA will boost:
- The UK’s GDP by £4.8 billion annually
- Wages by £2.2 billion per year
- Bilateral trade by £25.5 billion annually
The agreement is expected to create thousands of jobs, drive economic growth, and open up new markets for SMEs in both countries.
Special Additions: Youth Mobility and Cultural Exchange
The FTA includes a “Youth Mobility Scheme”, allowing 3,000 young professionals from each nation to live and work in the other for up to two years. This initiative promotes cultural exchange and skill development, enhancing people-to-people ties.
Leadership Speaks
Before leaving for the UK, PM Modi remarked that his meeting with PM Keir Starmer would strengthen the economic partnership, driving prosperity, growth, and job creation in both nations.
During his London visit, Modi will also meet King Charles III at Buckingham Palace and engage with top business delegations from both sides to further solidify economic cooperation.
Final Stages and Approval
On Tuesday night, the Union Cabinet, led by PM Modi, approved the final draft of the FTA. Legal teams from both nations worked through the night to finalize the text. Foreign Secretary Vikram Misri confirmed that last-minute legal reviews were underway until the announcement.
The FTA announcement followed a phone conversation between Modi and Starmer on May 6, where they agreed on final terms. Misri later described the deal as a “significant agreement with long-term strategic value.”
This landmark FTA marks a new chapter in India-UK relations, blending economic ambition with strategic foresight. As tariffs drop and businesses gain access to new opportunities, this deal is poised to reshape trade dynamics, create jobs, and ignite innovation across sectors.
With both nations looking forward to a shared future of prosperity, the India-UK Free Trade Agreement stands as a testament to the power of diplomacy, collaboration, and global economic vision.