On May 6, 2025, the United Kingdom and India finalized a landmark Free Trade Agreement (FTA) after more than three years of negotiations. This pact, the UK's most significant trade deal since leaving the European Union, is projected to boost bilateral trade by £25.5 billion ($34 billion) annually by 2040.

The agreement encompasses substantial tariff reductions, enhanced market access, and provisions for professional mobility, marking a pivotal advancement in economic relations between the world's fifth and sixth largest economies.

Key Provisions of the Agreement

• Tariff Reductions: India will reduce tariffs on 90% of British goods. Notably, whisky tariffs will decrease from 150% to 40% over a decade, and car tariffs will drop to 10%.
• Market Access: The UK will eliminate import duties on 99% of Indian exports, including textiles, food, and jewelry.
• Social Security Agreement: A provision exempts temporary Indian workers in the UK from dual social security contributions for up to three years.
• Business Mobility: The agreement introduces modest changes to business mobility, including visa access for Indian professionals such as musicians, chefs, and yoga instructors.

Background and Negotiation Timeline

Negotiations for the FTA commenced in January 2022, aiming to strengthen economic ties between the two nations. The talks faced delays due to political changes in both countries, with the UK experiencing four prime ministers during this period. The Labour government, elected in July 2024, expedited the agreement upon resuming negotiations in February 2025.

Economic and Social Implications

The FTA is expected to significantly enhance trade, investment, and cooperation across various sectors. For the UK, it represents a crucial step in its "Global Britain" strategy, reducing dependence on the EU and positioning the UK as a key trading partner with one of the world's fastest-growing economies. For India, the agreement opens up new markets for its exports and provides opportunities for its professionals in the UK.

Official Statements

British Prime Minister Keir Starmer described the deal as the most significant trade agreement since the UK left the EU. Indian Prime Minister Narendra Modi hailed it as ambitious and mutually beneficial.

Historical Context

This FTA marks a major advancement in economic relations between the UK and India. It is the UK's most economically significant trade deal since exiting the EU in 2020 and signifies India's growing openness to Western markets.

The agreement sets a precedent for future trade engagements and reflects a shared commitment to fostering economic growth and cooperation. Both governments are expected to ratify the agreement in the near future, paving the way for its implementation.