May 7th 2025.
On Tuesday, India and the UK came to an important agreement that will have a significant impact on their trade relationship. This landmark free trade agreement will result in lower tariffs on 99% of Indian exports and open up new opportunities for British businesses to export products such as whisky, cars, and more to India. In addition to the FTA, the two countries also finalized a double contribution convention.
Prime Minister Narendra Modi described these two pacts as a "historic milestone" that will not only boost trade and investment but also deepen the comprehensive strategic partnership between India and the UK. The FTA, which was announced after a phone call between Modi and his British counterpart Keir Starmer, will benefit 99% of Indian exports by eliminating duty charges and making it easier for professionals to travel for business and investment purposes.
Modi shared on social media, "In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention." He further added, "These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies."
After three years of negotiations, the trade deal will ensure comprehensive market access for Indian goods across all sectors. This means that India will benefit from tariff elimination on 99% of tariff lines, covering almost 100% of the trade values. The British government also released a statement stating that Indian tariffs will be reduced, with 90% of them becoming tariff-free within a decade and the remaining 10% being reduced to just 10%.
Some of the goods that will see reduced tariffs include whisky, gin, cosmetics, aerospace products, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits. As a result, British consumers can expect to see cheaper prices and a wider range of products, such as clothing, footwear, and food products like frozen prawns.
The FTA is expected to increase bilateral trade by 25.5 billion Pounds, UK GDP by 4.8 billion pounds and wages by 2.2 billion pounds each year in the long run. It will also have a positive impact on India's manufacturing industry and open up export opportunities for various sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals.
The trade deal will also make it easier for British firms to export their products to India, as it will ease mobility for professionals such as contractual service suppliers, business visitors, and investors. This agreement will also facilitate the mobility of independent professionals like yoga instructors, musicians, and chefs. The Indian statement also highlighted that non-tariff barriers have been addressed to ensure the free flow of goods and services.
Furthermore, the FTA aims to promote good regulatory practices and enhance transparency, which aligns with India's own focus on domestic reforms to improve the ease of doing business. The conclusion of this "balanced, equitable, and ambitious" FTA is expected to not only enhance bilateral trade but also create new employment opportunities and improve the overall well-being of citizens in both countries. It will also pave the way for joint development of products and services for global markets.
Both Modi and Starmer agreed that this deal will open up new opportunities for businesses, strengthen economic linkages, and deepen people-to-people ties. Starmer emphasized that strengthening alliances and reducing trade barriers with economies around the world is crucial in delivering a stronger and more secure economy. The British PM's office also shared that this deal will add billions to the UK economy, boost wages, and deliver on their government's plan for change.
Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has done since leaving the EU and the most ambitious agreement India has ever signed. Modi also expressed his gratitude towards Starmer's decisive leadership in getting the deal over the line and looks forward to welcoming him to India soon.
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