UK and India seal Free Trade Agreement Signed in London

Indian Prime Minister Narendra Modi has signed a free trade deal with Prime Minister Sir Keir Starmer in a multi-billion pound export boost.

The UK-India Free Trade Agreement (FTA), signed in mid-2025, is a major trade deal expected to significantly deepen economic ties between the two nations. After over three years of negotiations, the deal aims to boost bilateral trade by around £25.5 billion annually by 2040 and add roughly £4.8 billion each year to the UK’s GDP.

Key elements include substantial tariff cuts:

• For UK exports to India, tariffs on most goods fall from about 15% to just 3%. This benefits sectors like alcoholic beverages (whisky tariffs drop immediately from 150% to 75%, then to 40% over 10 years), automotive (tariffs on cars drop from up to 110% to 10% under quotas starting with internal combustion engine vehicles and transitioning to electric and hybrids), cosmetics, medical devices, and advanced manufacturing.
• For Indian exports to the UK, 99% of goods will have duty-free access. This opens up markets for textiles, footwear, clothing, seafood, jewelry, electronics, and certain vehicles. The UK is eliminating or reducing tariffs significantly to enhance Indian competitiveness in the British market.

Beyond goods, the deal breaks new ground in services and professional mobility:

• Mutual recognition of professional qualifications in fields like accountancy, law, and architecture makes it easier for individuals from both countries to work cross-border.
• Indian professionals working temporarily in the UK gain up to a three-year exemption from double National Insurance contributions if covered by India’s social security scheme (and similarly for UK employees temporarily in India), cutting costs for businesses and workers.
• UK firms get access to bid on Indian federal government contracts worth about £38 billion annually, especially in clean energy and infrastructure.
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Economically, the deal is predicted to create over 2,000 jobs in the UK and stimulate an additional £6 billion in investment, especially in technology and automotive sectors. It also locks in UK ownership caps for Indian insurance and banking firms up to 74%, ensuring fair treatment for British financial services companies in India.

Some criticisms remain. The UK imports a higher share of Indian goods duty-free (99%) compared to UK goods entering India (about The UK-India Free Trade Agreement, signed in 2025, is a landmark deal expected to boost bilateral trade by £25.5 billion annually by 2040 and add about £4.8 billion per year to the UK economy.

The agreement slashes tariffs dramatically:

• UK exports to India will see average tariffs drop from 15% to 3%. Whisky tariffs fall from 150% to 75% immediately, then to 40% over 10 years. Car tariffs reduce from up to 110% to 10% under quotas, covering internal combustion engines and transitioning to electric and hybrid vehicles. Other beneficiaries include cosmetics, medical technology, and advanced manufacturing.
• Indian exports to the UK enjoy duty-free access on 99% of goods, especially textiles, footwear, jewelry, electronics, clothing, seafood, and certain vehicles.
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Beyond goods, the deal opens new doors in services and mobility:

• Professional qualifications in sectors like law, architecture, and accountancy will be mutually recognized, making temporary work across borders easier.
• Indian workers in the UK get a three-year exemption from double National Insurance payments if covered by India’s social security, with a reciprocal arrangement for UK workers in India.
• UK firms can bid for Indian government contracts worth around £38 billion annually, notably in clean energy and infrastructure.

Economically, the FTA is predicted to create more than 2,000 jobs in the UK and attract £6 billion in investments, especially in technology and automotive. It also locks in UK investments in Indian insurance and banking sectors up to 74%.

Critics point out that while 99% of Indian goods enter the UK duty-free, only about 85% of UK goods will gain duty-free access in India. Also, the deal does not alter UK immigration policies, including visa rules beyond professional mobility and social security arrangements.

The agreement still needs ratification by both countries and is expected to come fully into effect by 2026, allowing businesses and professionals time to prepare for new opportunities.

Read more: https://www.bbc.co.uk/news/articles/c307ggj492vo

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