India and UK Sign Historic Free Trade Agreement: On July 24, 2025, India and the United Kingdom sealed a landmark Free Trade Agreement (FTA), hailed as Britain’s most significant trade deal since its exit from the European Union. Prime Minister Narendra Modi described the occasion as a “historic day,” emphasizing the transformative potential of the Comprehensive Economic and Trade Agreement (CETA) for both nations. Signed at Chequers, the UK Prime Minister’s country residence, the agreement marks a pivotal moment in India-UK relations, fostering deeper economic ties and mutual prosperity.
The FTA, finalized after three years of negotiations, is expected to boost bilateral trade by an estimated $34 billion annually, with the UK projecting a £6 billion investment boost to its economy. Indian Commerce Minister Piyush Goyal and his British counterpart Jonathan Reynolds formalized the pact in the presence of PM Modi and UK Prime Minister Keir Starmer. This deal, described as a “step change” by Starmer, underscores a shared commitment to enhancing trade, driving inclusive growth, and creating opportunities across diverse sectors.
For India, the agreement opens up unparalleled market access, with 99% of its exports to the UK benefiting from zero-duty tariffs. This is a game-changer for labor-intensive sectors like textiles, footwear, gems, jewelry, seafood, and agricultural produce. Indian farmers, fishermen, youth, and micro, small, and medium enterprises (MSMEs) are poised to reap significant benefits. The deal also facilitates access for Indian professionals in the UK’s IT and healthcare sectors, strengthening India’s global workforce presence. Additionally, Indian consumers will gain access to high-quality UK products, such as medical devices and aerospace components, at competitive prices.
For the UK, the FTA is a cornerstone of its post-Brexit trade strategy, described by Starmer as the “biggest and most economically significant” deal since leaving the EU. British businesses, particularly in whisky, automotive, and confectionery sectors, will benefit from reduced tariffs, with automotive tariffs slashed from over 100% to 10% under a quota system. The agreement also fosters cooperation in tackling corruption, fraud, organized crime, and illegal migration through enhanced intelligence sharing.
The journey to this agreement was not without challenges. Negotiations, initiated in 2022 under former UK Prime Minister Boris Johnson, faced delays due to differences over tariffs on alcohol, automobiles, and techno-legal matters. Resumed in February 2025 after a nine-month pause, both sides expedited efforts amid global trade uncertainties, including tariff concerns sparked by US policies. The deal’s ratification, expected within a year, will further solidify this partnership.
PM Modi highlighted the FTA’s role in advancing India’s ‘Make in India’ initiative, promoting export growth and job creation. He also noted ongoing efforts to develop a ‘Vision 2035’ roadmap to energize the India-UK strategic partnership over the next decade. Starmer echoed this sentiment, calling the agreement a “landmark deal” that delivers jobs, investment, and growth for British workers and businesses.
The Confederation of British Industry praised the FTA as a signal of the UK’s commitment to free and fair trade, with Chief Executive Rain Newton-Smith noting its potential to help UK firms scale and compete globally. For India, the agreement sets a precedent for future trade deals with advanced economies, potentially serving as a template for negotiations with the EU.
This historic FTA not only strengthens economic ties but also deepens the strategic alliance between India and the UK. As both nations navigate a complex global landscape, this agreement paves the way for shared prosperity, innovation, and collaboration, heralding a new chapter in their bilateral relationship.
