NATIONAL: India-UK Free Trade Deal: A New Chapter for Economic Growth
Historic Agreement
India and the United Kingdom (UK) finalized a Free Trade Agreement (FTA) on May 6, 2025, hailed as a landmark achievement. Prime Minister Narendra Modi (Narendra Modi) described it as an “ambitious and mutually beneficial” deal, strengthening business and investment ties. The agreement, announced alongside a Double Contribution Convention, marks a significant milestone in bilateral relations.
Trade Milestone
In 2024, trade between India and the UK reached £42.6 billion, making India the UK’s 11th largest trading partner. The FTA is projected to boost bilateral trade by £25.5 billion annually, increase UK GDP by £4.8 billion, and raise wages by £2.2 billion in the long term. This deal is the UK’s most significant trade agreement since exiting the European Union in 2020.
Tariff Reductions
The agreement ensures zero duties on 99% of Indian exports to the UK, enhancing market access. India will slash tariffs on British products like whisky, medical devices, machinery, and lamb, with whisky and gin duties dropping from 150% to 75%, and further to 40% by year ten. Automotive tariffs will also reduce from over 100% to 10% under a quota system.
Boost for UK Exports
British products such as cosmetics, aerospace, salmon, soft drinks, chocolates, and biscuits will benefit from lower Indian tariffs. This will make these goods more competitive in India, one of the world’s largest consumer markets. The deal is expected to drive job creation and innovation in both nations, as stated by UK Prime Minister Keir Starmer (Keir Starmer).
Services and Mobility
The FTA promotes trade in services, including IT, financial, professional, and educational sectors, fostering deeper collaboration. It eases mobility for professionals like yoga instructors, musicians, and chefs, as well as business visitors and investors. Indian employees in the UK will enjoy a three-year exemption from social security contributions.
Opportunities for India
The agreement opens export opportunities for India’s labor-intensive sectors, such as textiles, marine products, leather, footwear, sports goods, toys, gems, jewelry, engineering goods, auto parts, and organic chemicals. This will bolster India’s manufacturing and export capabilities, driving economic growth. The deal aligns with India’s vision of becoming a global trade hub.