In a major milestone for international economic cooperation, India and the United Kingdom on Thursday signed a landmark Free Trade Agreement (FTA), which is expected to enhance bilateral trade by nearly $34 billion annually. The agreement was formalised in London during Prime Minister Narendra Modi’s visit, with India’s Commerce and Industry Minister Piyush Goyal and the UK Secretary of State for Business and Trade Jonathan Reynolds signing the deal on behalf of their respective governments.
This FTA marks India’s most comprehensive trade pact in over a decade and is the UK’s first significant post-Brexit trade deal. Both governments have hailed the agreement as a transformative step in strengthening their economic partnership.
A roadmap for shared prosperity
Prime Minister Modi referred to the agreement as a "new roadmap for shared prosperity," stating that it would provide real advantages in a number of areas, helping professionals, small businesses, farmers, and fishermen. Indian exports—including textiles, gems and jewellery, seafood, leather goods, engineering items, and processed food products—will gain near-zero duty access to the UK market, significantly improving their competitiveness.
British goods to get cheaper in India
On the other side, the FTA will sharply reduce tariffs on a broad range of British exports entering India. Products such as medical devices, aerospace components, automobiles, whisky, chocolates, and cosmetics—currently subject to average tariffs of around 15%—will now face duties as low as 3%. This is expected to make these goods considerably more affordable for Indian consumers.
Agneshwar Sen, Trade Policy Leader at EY India, described the FTA as a transformative initiative that would unlock nearly unrestricted trade between the two nations. He emphasized that removing tariffs on key Indian export items would spur job creation and growth, particularly in labour-intensive sectors. Sen also pointed to major wins for Indian service professionals, such as liberalised visa rules and a landmark social security provision.
“Consumers in both countries will gain through more options and reduced prices. This isn’t just a trade deal—it’s a future-forward partnership between two dynamic economies,” Sen noted.
Sectoral gains for India
Several Indian industries are anticipating significant gains:
- Leather Industry: Expected to capture an additional 5% share of the UK market within two years.
- Engineering and Electronics: Exports to the UK could double by 2030.
- Chemicals: Anticipated export growth of 40% in the next financial year.
- Software Services: Projected to grow by 20% annually post-implementation of the FTA.
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Opportunities for Indian professionals
Additionally, the agreement allows Indian professionals to work in 35 UK sectors for a maximum of two years without having to set up a local office. It will now be simpler for freelancers, chefs, musicians, yoga instructors, and contractual service providers to find employment in the UK.
Industry estimates suggest that over 60,000 Indian IT professionals could benefit from the new provisions each year, particularly those employed with companies such as TCS, Infosys, Tech Mahindra, HCL Technologies, and Wipro.
Social Security Relief
A notable feature of the agreement is a social security arrangement that exempts Indian professionals on short-term assignments in the UK from making social security contributions for up to three years. Puneet Gupta, Partner at EY India’s People Advisory Services, said this would reduce financial and compliance burdens for both companies and employees.
“This provision allows employees to maintain contributions in their home country, ensuring continuity of social security benefits while making international assignments more cost-effective for employers,” Gupta explained.
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What the deal means for the UK
From the UK's perspective, the deal is equally impactful. Nearly 90 per cent of British exports to India will become cheaper, with 85 per cent set to become fully duty-free over the next decade. Furthermore, British firms will gain access to Indian public procurement opportunities—specifically, non-sensitive government contracts valued at over ₹2,000 crore, covering approximately 40,000 tenders annually.
According to UK officials, the FTA could result in an additional £2.2 billion in wages and more than 2,000 new jobs.
Additionally, the agreement contains specific chapters on intellectual property rights and financial services. In India's financial sector, UK companies will be treated like citizens, guaranteeing fair competition. Both parties agreed to preserve access to reasonably priced medications after raising concerns about possible limitations on India's production of generic drugs.
UK Prime Minister Keir Starmer welcomed the deal, calling it a “big win for Britain.” He said the agreement would lead to the creation of thousands of jobs and attract increased investment into the UK economy. As part of the broader economic engagement, 26 British companies will launch new business ventures in India, while Indian firms have pledged nearly $6 billion in investments into the UK.
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