India and the United Kingdom finalised a trade agreement (FTA) on May 6, 2025, which will be a major milestone in their economic partnership. The agreement, announced by Indian Prime Minister Narendra Modi after discussions with U.K. Prime Minister Keir Starmer, includes a Double Contribution
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Convention and has a mandate to boost trade, investment and employment. The deal is estimated to add 25.5 billion pounds in trade and 4.8 billion pounds to U.K. GDP annually by 2040. It covers goods, services, investments and property, with 90% of tariff lines reduced, with 85% becoming tariff-free within a decade
Key Benefits:
For India: Tariffs on 99% of Indian goods, including textiles, apparel, footwear and marine products, have been reduced to zero in the UK. Indian IT, services and education
sectors have received better market access. The BIT facilitates UK investment in India. And Indians in the UK get a three-year exemption from National Insurance contributions.
For the U.K.: Tariffs on Scotch whisky and gin have been cut from 150% to 75%, to be reduced to 40% over ten years, potentially worth £1 billion in whisky over five years. Automotive
tariffs under the quota have fallen from 100% to 10%, helping U.K. carmakers. Other sectors such as cosmetics, aerospace and financial services get better access to India’s 1.4 billion-strong market.
Challenges Resolved:
Mobility and Visas: An issue regarding access to visas for Indian professionals has been largely resolved, allowing for more work without changing UK immigration policies.
Tariffs and market access: Whisky, cars and pharmaceuticals were dealt with, although India did not receive an exemption from the UK carbon cap and (CBAM).
Sensitive sectors: The UK maintained protections for its NHS, food standards and animal welfare, while India addressed concerns for its agricultural sector, including sugar and egg exports.
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Background and Negotiations:
Talks began in January 2022 under the “enhanced trade partnership” announced by Modi and UK Prime Minister Boris Johnson. After 14 rounds, the talks were delayed due to elections in both countries in 2024. The Labour government of Trade and Business Secretary
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Jonathan Reynolds resumed talks in February 2025, and by April 90% of the deal was resolved. The final agreements were reached after intense discussions between Reynolds and Indian minister Piyush Goyal.
Concerns and Criticisms:
Britain’s National Farmers Union has raised concerns about Indian agricultural subsidies, citing potential risks to British farmers’ standards. Pesticide Action Network UK warns of a rise in pesticide residues in food due to differing regulations
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India’s effort for social visa process partially addressed, but some concessions withdrawn
Future Prospects:
The FTA strengthens the India-UK Comprehensive Partnership, under which Modi and Starmer will meet soon to sign the deal. And the BIT aims to protect service investments. The agreement puts both
countries in a position to counter trade pressures, including US tariffs under President Donald Trump, and supports India’s goal of $1 trillion in exports by 2030
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