Piyush Goyal (1L) and Jonathan Reynolds (1R) during their FTA talks. (Photo: X/@jreynoldsMP)
New Delhi: India and the United Kingdom successfully concluded a landmark free trade agreement (FTA) on Tuesday. This was announced by the prime minister, Narendra Modi, and his British counterpart, Keir Starmer. Both leaders hailed the agreement as a significant step forward in bilateral relations between the two nations.
The comprehensive trade pact, described as “forward-looking” by Indian officials, is designed to complement economic growth aspirations of both countries. Modi characterized the agreement as “a historic milestone” that would catalyse trade, investment, and innovation.
Negotiations gained substantial momentum after the two prime ministers met on the sidelines of the G20 Summit in Rio de Janeiro, Brazil, in November 2024. Since February 2025, intensive rounds of engagement were conducted between the commerce and industry minister, Piyush Goyal, and the UK secretary of state, Jonathan Reynolds, along with their respective teams.
“This agreement sets a new benchmark for equitable and ambitious trade between two large economies,” Goyal stated. “It will benefit Indian farmers, fishermen, workers, MSMEs (micro, small, and medium enterprises), startups, and innovators. It brings us closer to our goal of becoming a global economic powerhouse.”
The commerce secretary, Sunil Barthwal, emphasized the transformative nature of the agreement, calling it a “game changer” that would accelerate India’s economic growth and enhance global integration. Officials noted that this represents the most comprehensive free trade deal ever negotiated by India and will serve as the gold standard for future trade engagements.
The FTA comes against the backdrop of flourishing economic relations, with bilateral trade currently valued at approximately $60 billion and projected to double by 2030. The agreement aims to deepen trade and investment ties across numerous sectors, including goods, services, and technology.
In a significant achievement, India has secured an exemption for its workers temporarily stationed in the UK from paying social security contributions for up to three years under the “Double Contribution Convention”. This provision is expected to substantially enhance the competitiveness of Indian service providers in the British market.
Comprehensive Benefits of the India-UK Trade Partnership
The newly concluded agreement between India and the United Kingdom delivers wide-ranging advantages for both economies:
Expansive Market Access – The agreement provides comprehensive access for goods across all sectors with tariff elimination on approximately 99% of product lines, covering virtually all trade value. This creates unprecedented opportunities for export growth between the two nations.
Manufacturing Boost – Indian manufacturing stands to gain significantly, particularly in labour and technology-intensive sectors. The agreement creates competitive advantages for textiles, leather goods, footwear, marine products, sports equipment, gems and jewellery, as well as engineering products, automotive components, and organic chemicals.
Employment Generation – Economic analysis indicates the agreement will create substantial employment opportunities across multiple sectors of the Indian economy.
Services Sector Advancement – India benefits from one of the UK’s most ambitious commitments in services sectors, including information technology, financial services, professional services, and educational services, creating new avenues for growth and collaboration.
Professional Mobility – The agreement facilitates movement of professionals across borders, including contractual service suppliers, business visitors, investors, intra-corporate transferees (along with working rights for their partners and dependent children), and independent professionals such as yoga instructors, musicians, and specialized chefs.
Digital Opportunity – The agreement creates significant potential for India's skilled workforce to access opportunities in the UK’s advanced digital ecosystem, particularly in financial and professional services sectors.
Enhanced Competitiveness – The social security contribution exemption for temporary workers represents a major financial benefit for Indian companies operating in the UK market, potentially creating new job opportunities for Indians.
Reduced Trade Barriers – The agreement addresses non-tariff barriers to ensure smoother flow of goods and services without unjustified restrictions on Indian exports.
Regulatory Alignment – The FTA promotes regulatory best practices and transparency that complement India's domestic reforms aimed at improving ease of doing business.
