LONDON / NEW DELHI — July 23, 2025 — The United Kingdom and India are set to sign a landmark Free Trade Agreement (FTA) on Thursday during Indian Prime Minister Narendra Modi’s official visit to London. The deal is expected to significantly boost trade, create jobs, and offer greater market access for companies in both countries.
A Major Step Forward in UK-India Relations
This new India-UK trade deal follows three years of negotiations. Both sides concluded the agreement in May 2025, aiming to strengthen economic ties amid global tariff uncertainties. The FTA, once approved by the British Parliament and India’s federal cabinet, is expected to take effect within a year.
What the Free Trade Agreement Covers
The trade pact will cut or reduce tariffs across major industries:
- Scotch whisky tariffs will fall from 150% to 75% immediately and reduce further to 40% over 10 years.
- Automobile duties will drop to 10% from over 100% for UK carmakers entering the Indian market, under a controlled quota system.
- Indian textiles and electric vehicles will gain broader access to the UK market with zero duties on 99% of Indian exports.
- British companies will also gain access to India’s public procurement market, including sectors like clean energy and insurance.
Economic Impact of the UK-India Trade Agreement
British Prime Minister Keir Starmer hailed the FTA as a major win for the UK.
“This deal will create thousands of jobs across the UK and unlock huge potential for British businesses,” he said.
The India-UK FTA is expected to add £25.5 billion ($34 billion) to bilateral trade by 2040. While its direct impact on the UK economy is modest—£4.8 billion per year—it is still the most significant trade deal Britain has signed since leaving the European Union in 2020.
What It Means for Businesses and Workers
The deal includes simplified rules for temporary business visits, although it does not cover visa changes. Both countries also agreed that temporary workers will no longer pay social security contributions in both countries during overseas assignments.
Environmental and Investment Negotiations Still Ongoing
India pushed for an exemption from the UK’s Carbon Border Adjustment Mechanism (CBAM)—which will tax high-emission imports starting in 2027—but that was not granted.
Talks on a separate bilateral investment treaty are still in progress and were not finalized as part of this trade deal.
Stronger Strategic Partnership Beyond Trade
During this visit, Modi and Starmer will also sign agreements covering:
- Defence cooperation
- Climate action
- Crime prevention and intelligence sharing
This aligns with both nations’ efforts to deepen their strategic partnership beyond economics.
