India and the UK have officially signed a landmark Free Trade Agreement (FTA) aimed at significantly boosting bilateral trade and investment. The agreement was formalized on Thursday, July 24, 2025, in the presence of Prime Minister Narendra Modi and his British counterpart, Keir Starmer, at Starmer's Chequers country estate.

Key Highlights of the India-UK FTA:

• Trade Boost: The FTA is projected to increase annual bilateral trade by $34 billion. Both countries aim to double their trade value to $112 billion by 2030.
• Tariff Reductions: India will reduce tariffs on 90% of UK products, with the average levy dropping from 15% to 3%. The UK will eliminate duties on 99% of Indian exports.
• Duty-Free Access: Approximately 99% of tariff lines for goods exported from India to the UK will have zero tariffs. India is set to gain from 99% duty-free access to the UK market, covering nearly all of the trade value with the United Kingdom.
• Strategic Partnership: For India, the deal represents its biggest strategic partnership with an advanced economy.
• Sectors to Benefit: The agreement is expected to boost sectors like leather, textiles, electronics, and software, and attract new investments. Key labor-intensive sectors like marine, textiles, chemicals, and base metals will now enjoy zero duties.
• Whisky and Automobiles: India will immediately cut its tariff on Scotch whisky in half to 75%, with that level falling to 40% in a decade. Automotive sector tariffs will decrease from 110% to 10% under a quota system.
• Services: The deal includes a chapter on financial services, ensuring UK financial services companies are treated equally with domestic suppliers. It also encompasses IT, financial, professional services, business consulting, education, and telecom.
• Intellectual Property: There will also be a chapter on intellectual property.

Statements from Leaders:

• Prime Minister Narendra Modi: Described the deal as a "blueprint for our shared prosperity". He highlighted that Indian textiles, footwear, gems, jewelry, seafood, and engineering goods will get better market access in the UK.
• Prime Minister Keir Starmer: Hailed the agreement as a “landmark moment” for both countries and "the biggest and most economically significant trade deal" the UK has made since leaving the European Union in 2020. He emphasized that the deal would create thousands of British jobs across the UK, unlock new opportunities for businesses, and drive growth.

Expected Economic Impact:

• Increased Exports: UK officials estimate the deal will increase UK exports to India by almost 60% over the long term. India's leather sector is projected to gain an additional market share of 5% in the UK within the next two years. Engineering exports are likely to double by 2030.
• Tariff Reductions: India's average tariff on UK products will drop from 15% to 3%. Import taxes on whisky and gin will be halved from 150% to 75% before falling to 40% by year 10 of the deal.
• Job Creation: The agreement is expected to generate large-scale employment and empower artisans, women-led enterprises, and MSMEs.

Additional Benefits:

• Easier Export of British Products: The trade agreement will facilitate easier export of British products, particularly whisky, to India.
• Boost to Specific Sectors: Key sectors such as ready-made garments, home textiles, carpets, and handicrafts are set for exponential growth.
• Level Playing Field: Indian farm products will get tariff parity with major European exporters like Germany, while zero duties on textiles and leather are expected to boost India's competitiveness among regional peers such as Bangladesh and Cambodia.

The India-UK FTA is viewed as a historic milestone in trade relations between the two countries, poised to boost economic activity, create jobs, and foster growth across various sectors.