(Commonwealth_India) India and the UK have just taken a big step forward in their long-standing partnership, officially concluding negotiations on a major Free Trade Agreement (FTA). Prime Ministers Narendra Modi and Keir Starmer announced on May 6, 2025, calling the deal a game-changer that will reshape how the two countries do business together.
This agreement has been in the works for a while, and now that it’s finalized, the benefits should be great. The UK government estimates that the agreement could enhance trade between the two nations by £25.5 billion a year, adding to the solid £43 billion trading association. Prime Minister Modi highlighted how the FTA will strengthen the broader strategic partnership between the two nations, unlocking new opportunities for growth, investment, and job creation on both sides.
The UK’s Trade Commissioner for South Asia described the FTA as more than just a deal—he called it a roadmap for future economic collaboration. One of the main victories is the elimination of tariffs on 99% of Indian exports to the UK and 90% of UK exports to India. The deal will make goods and services easier, opening the door for more industries to trade across boundaries.
That said, there’s still a bit of process left. Despite its conclusion, the arrangement still requires authorization checks and approval from policymakers in both countries. The approval from India’s Union Cabinet is necessary, and the UK Parliament’s ratification could take up to a year. If all goes smoothly, the agreement should be fully up and running within the next 15 months.
What really stands out in this deal is how much it supports services and professionals. It covers 36 sectors for contractual service suppliers and 16 for independent professionals—meaning Indian chefs, yoga instructors, artists, IT experts, and other professionals will find it easier to work in the UK. And it’s not just about easier access—there’s real money involved.
One major relief for Indian professionals heading to the UK on short-term assignments is the agreement on social security contributions. Until now, many had to pay into the UK’s National Insurance system without getting much in return, since they usually return to India after their work is done. That’s changing. This FTA includes a provision to avoid double contributions, potentially saving employees and their companies around £500 a year per person.
On the trade side, Indian exporters stand to gain a serious edge. The UK market will now be much more open to Indian goods—especially in labor-heavy sectors like textiles, garments, footwear, leather, seafood, gems, and engineering parts. These sectors are expected to get a strong push, translating into more factory orders, more jobs, and higher income for workers back home.
For British exporters, the deal is just as promising. India has agreed to gradually reduce tariffs on high-value UK products like whisky, medical equipment, machinery, and lamb. Whisky lovers in India, in particular, will see a big change—the current 150% import duty will be brought down to 40% over the next ten years. The agreement also cuts import duties on everyday items like chocolates, cosmetics, biscuits, and even salmon, making British products more affordable for Indian consumers.
Cars are another key part of the deal. UK carmakers will be able to ship vehicles to India at much lower tariffs—down from over 100% to just 10%—under a special quota system. This represents a significant advantage; however, India has made efforts to protect its local industries. Some items—like smartphones, diamonds, plastic goods, and base station components—have been excluded from duty cuts. For petrol and diesel vehicles, tariff reductions will be limited and phased, while electric vehicles will see only modest concessions.
Despite India’s growing appetite for electric vehicles, British EV imports are still tiny—luxury brands like Rolls-Royce and Bentley cater to only a small slice of the market. But this agreement could help change that, slowly increasing the flow of premium British automobiles to India.
India’s trade with the UK is already strong, with a solid surplus in its favor. In the 2023–24 financial year, India exported nearly $13 billion worth of goods to the UK while importing just over $8 billion. The new FTA is expected to build on that success, helping both countries trade more efficiently and fairly.
Ultimately, this deal is about more than just numbers. It’s about building a long-term partnership—one that supports innovation, mobility, sustainability, and economic resilience in an unpredictable global economy. It’s a sign that India and the UK are ready to move forward together, not just as trading partners, but as collaborators shaping the future.
