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UK and India Finalize Historic Free Trade Deal with Keir Starmer and Narendra Modi, Slashing Tariffs on Key Exports.

International | Dated: 24 Jul 2025

On 24 July 2025, the governments of the United Kingdom and India officially signed a landmark Free Trade Agreement (FTA), following three years of negotiations. Prime Minister Keir Starmer and Prime Minister Narendra Modi hailed the pact as a new era of economic cooperation, boosting bilateral trade and access to each other’s key export markets.

🎯 Key Highlights:

  • - The agreement marks the largest bilateral trade deal the UK has signed since Brexit and the most ambitious trade pact ever concluded by India. Negotiated under India–UK talks that began in 2022 under UK Prime Minister Boris Johnson and concluded after leadership changes in both countries, the FTA aims to double bilateral trade and deliver mutual economic dividends.
  • - Under the deal, India will eliminate import duties on 99% of its export lines to the UK, benefiting Indian sectors such as textiles, footwear, gems and jewelry, and marine products. Meanwhile, India will reduce tariffs on 90% of British exports, with 85% becoming fully tariff-free within a decade. Tariffs on British spirits such as whisky and gin will be halved from 150% to 75% immediately, eventually dropping to 40%; duties on UK automobiles will fall from over 100% to just 10% under a quota scheme.
  • - The agreement is projected to raise UK GDP by £4.8 billion annually, boost British wages by £2.2 billion, and expand bilateral trade by £25.5 billion by 2040. India is expected to gain significant export growth from zero-duty access for engineering goods, chemicals, agricultural and food products, pharmaceuticals, and IT services.

💡 Other Important Facts:

  • (i) Innovative concessions include a Double Contribution Convention, under which Indian professionals working in the UK and UK professionals in India are exempt from host-country social security contributions for up to three years. The pact also opens temporary visa routes for chefs, yoga instructors, musicians, and IT talent, increasing people-to-people connectivity and service-sector cooperation.
  • (ii) Leaders from both countries emphasized broader strategic benefits: Modi described the deal as a "blueprint for shared prosperity", and Starmer called it the most economically significant since Brexit, promising to energize trade, create jobs, and foster innovation. While Indian dairy and rice sectors remain protected, sensitive agricultural goods, services, and trade rules of origin are part of ongoing follow-up negotiations.
  • (iii) The FTA is expected to act as a template for India's future trade deals with markets such as the European Union and the United States. Its strategic impacts span public procurement access, investment facilitation, digital trade, and cooperative frameworks in defense, healthcare, and energy innovation.

📚 Test Your Knowledge:

Recently, India signed a landmark Free Trade Agreement (FTA) aimed at reducing tariffs on key exports such as whisky, automobiles, and textiles with which country?

Correct Answer: United Kingdom

🚀 Quick Recap:

About United Kingdom

  • Capital: London
  • Prime minister: Keir Starmer