Narendra Modi (2L) shakes hands with Keir Starmer after Piyush Goyal (R) and Jonathan Reynolds signed the free trade deal. (Photo: X/@narendramodi)
New Delhi: India and the United Kingdom concluded a comprehensive free trade agreement on Thursday, during the prime minister, Narendra Modi’s, high-profile visit to London, marking the most significant economic partnership between the two nations since independence. The pact promises to more than double bilateral trade from the current $56 billion to over $120 billion by 2030.
The agreement, officially termed the Comprehensive Economic and Trade Agreement, was signed by the commerce and industry minister, Piyush Goyal, and the UK secretary of state for business and trade, Jonathan Reynolds, in the presence of Modi and his British counterpart, Keir Starmer.
The deal grants duty-free access to 99% of Indian exports while reducing tariffs on 90% of UK goods, making it the most ambitious trade liberalization framework either nation has negotiated in recent years.
Indian exporters gain big
Indian exporters across labour-intensive sectors stand to benefit substantially from the agreement. Textiles, marine products, leather goods, footwear, sports equipment, toys, and gems and jewellery will now enter the UK market without tariffs, providing immediate competitive advantages over suppliers from other nations.
The services sector, particularly India’s information technology industry, emerges as a major beneficiary. Leading firms, including Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra, are expected to leverage expanded mobility provisions that could enable over 60,000 Indian professionals to work in the UK annually under streamlined procedures.
The agreement introduces significant labour mobility reforms, allowing Indian professionals – including contractual service providers, architects, engineers, chefs, yoga instructors, and musicians – to work in the UK under new quota systems. Social security contributions will be waived for Indian workers on assignments lasting up to three years, reducing operational costs for both employees and employers.
Agricultural producers and manufacturers gain access to new markets for farm products, engineering goods, automotive components, and organic chemicals, sectors where India has demonstrated growing export competitiveness.
Tariff cuts on premium UK goods
British exporters of premium consumer goods and industrial products will benefit from dramatic tariff reductions across multiple categories. Whisky tariffs will drop immediately from 150% to 75%, eventually falling to 40% over ten years. Similar cuts apply to gin, luxury cars, pharmaceuticals, aerospace components, soft drinks, chocolates, cosmetics, lamb, salmon, and electrical machinery.
The automotive sector receives particularly favourable treatment, with UK car and electric vehicle exports facing tariffs as low as 10% – down from 110% – under special quota arrangements. This represents a significant opportunity for British manufacturers to establish footholds in one of the world’s fastest-growing automotive markets.
British firms will also gain unprecedented access to Indian government procurement, becoming eligible to bid for federal contracts worth over ₹2 billion each. This marks a departure from India’s historical preference for domestic suppliers in public sector projects.
Professional service providers, including consultants, creative industry professionals, chefs, and musicians, benefit from streamlined visa procedures and expanded work opportunities in India, mirroring the mobility provisions extended to Indian professionals.
Economic impact
The agreement is projected to add £4.8 billion ($6.1 billion) annually to the UK economy by 2040 while creating thousands of jobs across both nations. For Britain, the deal represents the largest and most economically significant trade agreement since Brexit, providing access to the world’s fourth-largest economy and fastest-growing major market.
Modi described the pact as transformative, stating it would unlock tariff-free access for nearly all Indian exports while advancing the “Make in India” initiative. The agreement specifically targets job creation for youth and women in sectors where India maintains competitive advantages.
The deal extends beyond traditional trade liberalization, incorporating comprehensive chapters on digital trade, climate action, intellectual property protection, and sustainable development. Special provisions support small and medium enterprises, startups, and women entrepreneurs in accessing global value chains.
Implementation timeline
While the agreement has received cabinet approval in India, UK parliamentary ratification remains pending – a process expected to take up to a year. Full operational implementation is anticipated by mid-2026, with both governments using the interim period to prepare exporters and adapt administrative systems.
The pact establishes a template for India’s future trade negotiations with the European Union and other major economies, which demonstrates New Delhi’s capacity to conclude ambitious agreements with developed nations. The deal also strengthens defence, research, and health cooperation, creating a strategic partnership that transcends commercial considerations.
Industry leaders in both countries have welcomed the agreement as a catalyst for economic growth and technological collaboration. British business groups view it as validation of the post-Brexit trade strategy, while Indian exporters anticipate significant market share gains across multiple sectors.
The agreement includes nearly £6 billion ($7.6 billion) in announced bilateral trade and investment initiatives, with major contracts in aerospace and clean energy sectors expected to generate employment opportunities across both economies.
As the world’s fourth and sixth-largest economies formalize their enhanced economic partnership, the India-UK free trade agreement signals a new era of developed-developing nation trade cooperation, which can potentially influence global trade architecture in the coming decades.
