India and the UK have officially signed a historic Free Trade Agreement (FTA), also known as the Comprehensive Economic and Trade Agreement (CETA), marking a significant milestone in their bilateral relations. The agreement, formalized in London on July 24, 2025, in the presence of Prime Ministers Narendra Modi and Keir Starmer, is projected to boost bilateral trade by £25.5 billion annually. Both governments hail it as a roadmap for shared prosperity, with the UK Prime Minister calling it the "most economically significant bilateral trade deal" since leaving the European Union.

Key Highlights and Benefits

• Duty-Free Access: The FTA grants 99% of Indian exports duty-free access to the UK market. This covers a wide range of sectors, including textiles, leather, marine products, engineering goods, and processed foods.
• Tariff Reductions: India will reduce or eliminate tariffs on 90% of its tariff lines for UK exports, covering 92% of the UK's exports to India. This includes tariff reductions on spirits like whisky and gin, initially to 75% and then to 40% over ten years, and a decrease in automotive sector tariffs from 110% to 10% under a quota system.
• Boost to Bilateral Trade: The agreement aims to increase two-way trade to over $100 billion by 2030, from the current $56 billion. Some projections suggest that the FTA will enhance annual bilateral trade by £25.5 billion over the long term.
• Agricultural Benefits: Over 95% of agricultural and processed food tariff lines from India will attract zero duty, potentially increasing agri-exports by over 20% in the next three years. This supports India's goal of achieving $100 billion in agri-exports by 2030. The FTA also creates market access for new products like jackfruit, millets, and organic herbs. India has, however, protected its sensitive sectors like dairy, apples, oats, and edible oils.
• Textile Sector Boost: The elimination of tariffs on Indian textiles is expected to increase exports to the UK by around 85%, potentially reaching £2.9 billion. This will enhance India's competitiveness in the UK market, which currently imports $26.95 billion worth of textiles annually but sources only $1.79 billion from India.
• Engineering and Pharmaceutical Gains: India's engineering exports to the UK are likely to surge with duty-free access, potentially doubling to over $7.5 billion by 2029-30. The FTA also removes tariffs on generic pharmaceuticals, enhancing their competitiveness in the UK, which is India's largest pharmaceutical market in Europe.
• Opportunities for Professionals: The agreement exempts 75,000 Indian workers from UK social security payments for three years and grants access to 36 service sectors without an Economic Needs Test for Indian firms and freelancers.
• Benefits for UK: The UK will benefit from India's tariff cuts on aerospace, automobiles, and electrical machinery, with reductions ranging from 11% to 110% down to minimal levels. British companies will also be allowed to bid on non-sensitive Indian government contracts worth over Rs 2,000 crore.
• Job Creation and Investment: The UK anticipates creating thousands of jobs and securing billions in investment as a result of the FTA. New Indian investments and export wins are expected to create over 2,200 British jobs across the country.

Impact on Consumers

Consumers in both countries are expected to benefit from the FTA through greater choice and lower prices. Indian consumers can anticipate reduced prices on British goods like soft drinks, beauty products, chocolates, biscuits, salmon, lamb, fish, automobiles and whisky. The import duties on whisky will see a reduction from 150% to 75%, followed by a further decrease to 40% over a decade.

Strategic Significance

For India, the deal represents its most significant strategic partnership with an advanced economy, potentially serving as a template for future agreements with the EU and other regions. The agreement also strengthens the Comprehensive Strategic Partnership between the UK and India, fostering collaboration in areas like defense, migration, climate, and health.

The India-UK FTA is poised to usher in a new era of economic cooperation, offering substantial benefits to businesses, consumers, and professionals in both nations.