In a momentous step that redefines the economic ties between two major democracies, India and the United Kingdom on Thursday formally signed a long-anticipated Free Trade Agreement (FTA), marking a turning point in their bilateral relationship.
The agreement, hailed as a “comprehensive economic partnership”, is projected to significantly boost trade volumes, reduce tariffs on key goods and services, and create vast new opportunities for businesses and professionals on both sides.
The signing ceremony was held in the presence of Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, with India’s Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynolds formally inking the deal.
A Milestone in India-UK Relations
Calling it a “milestone moment,” Prime Minister Modi underscored the years of meticulous negotiations and collaboration that culminated in the pact. “Today marks a historic day in our bilateral relations.
I am delighted that after years of hard work, our two nations have signed the Comprehensive Economic and Trade Agreement (CETA),” Modi said.
“This pact will open up the British market to a wide range of Indian agricultural produce and processed food, creating fresh opportunities for our farmers and food industry.”
Echoing Modi’s sentiments, British PM Keir Starmer called the deal the most economically significant trade agreement the UK has signed since it departed from the European Union.
“It is a deal that will bring huge economic benefits to both countries, boosting wages, raising living standards, and making trade more efficient and cost-effective,” Starmer stated.
Key Provisions of the FTA
The newly signed FTA will eliminate or significantly reduce tariffs on a broad range of products, benefiting industries, farmers, entrepreneurs, and professionals alike. The bilateral trade volume is expected to surge by approximately USD 34 billion annually.
For India:
- 99% of Indian exports will now enjoy tariff-free access in the UK.
- Indian agricultural products such as fruits, vegetables, cereals, turmeric, cardamom, and processed foods like mango pulp, pickles, and pulses will be exported to the UK without any tariffs.
- Labour-intensive sectors like footwear, textiles, and clothing will benefit from eased export procedures and lower costs.
- Marine products such as shrimp, tuna, fishmeal, and fish feeds, which earlier faced tariffs ranging from 4.2% to 8.5%, will now enjoy duty-free access—a move expected to uplift the incomes of India’s coastal fishing communities.
Commerce Minister Piyush Goyal said the deal ensures duty-free exports of 95% of India’s agricultural goods and 99% of marine exports, which will significantly benefit small-scale producers and exporters.
For the UK:
- British exports to India, such as whisky, automobiles, aerospace components, medical devices, soft drinks, cosmetics, and high-end equipment, will become more affordable due to a significant reduction in tariffs. For instance:
- Tariffs on UK whisky and cars, which currently range between 60% and 100%, will drop to just 3%, opening up vast potential for British companies in the expanding Indian consumer market.
- High-value medical devices like X-ray systems, ECG machines, diagnostic tools, and surgical instruments will now be available in India at lower costs, improving healthcare affordability and access.
An official from India’s Ministry of Commerce confirmed that these concessions would bring down costs and stimulate demand in critical sectors like healthcare and manufacturing.
Opportunities for Services and Professionals
One of the most forward-looking elements of the agreement is the inclusion of liberalised services trade, which will benefit India’s IT, education, legal, and consulting sectors. Highlights include:
- Indian freelancers and firms will have barrier-free access to 36 UK service sectors without the need for an Economic Needs Test (ENT).
- Indian professionals will be allowed to work in the UK across 35 sectors for up to 24 months, even without setting up a local office.
- For up to three years, Indian citizens working in the UK under this pact will be exempt from paying UK social security, effectively increasing their take-home income and competitiveness.
This marks a significant policy shift and reflects the UK’s recognition of India’s talent in the digital economy, higher education, and consultancy services.
Protection for Sensitive Indian Sectors
Mindful of concerns raised by domestic stakeholders, particularly in the agriculture sector, the Indian government has carefully excluded certain sensitive products from tariff cuts. Items such as dairy products, edible oils, oats, and apples will continue to face full tariffs to protect the livelihoods of Indian farmers.
Industry Applauds the FTA
Industrialists and economic analysts alike have lauded the deal as a game-changer. Vedanta Group chairman Anil Agarwal welcomed the agreement, saying, “This FTA is a win-win for both countries. It will boost economic activity, create jobs, and open new doors for entrepreneurs in both India and the UK. We expect this deal alone to add at least USD 20 billion in additional trade.”
Agarwal also highlighted that this agreement represents the culmination of over two decades of deepening economic engagement between New Delhi and London.
The India-UK Free Trade Agreement ushers in a new era of strategic and economic cooperation between the two nations. From tariff-free trade in goods to expanded professional mobility, the agreement reflects a shared vision of inclusive growth, innovation, and global competitiveness.
With trade and commerce now infused with a renewed sense of partnership, this FTA is expected to not only enhance bilateral trade volumes but also strengthen the long-standing historic ties between India and the United Kingdom in an increasingly interconnected world.
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