India and the UK are poised to sign a highly anticipated Free Trade Agreement (FTA) today, marking a significant milestone in their economic relationship.
A Landmark Agreement
This deal is set to be one of India’s most comprehensive free trade agreements to date. It is being closely watched as a potential blueprint for other major trade negotiations, including India’s ongoing talks with the European Union.
The agreement aims to integrate the UK’s advanced services sector with India’s, opening new opportunities for both nations. It will also facilitate the phased entry of high-end British cars and whisky into the Indian market.
The Long Road to a Deal
Discussions for a trade pact between India and the UK (then part of the EU) first began in 2007. However, those initial talks stalled due to Europe’s demands for access to India’s sensitive sectors like automobiles and agriculture.
After withdrawing from the Regional Comprehensive Economic Partnership (RCEP) in 2019 over concerns about Chinese imports, India shifted its focus. It began actively seeking deeper economic integration with Western markets, which brought renewed attention to a UK deal.
The urgency to secure new markets was also influenced by a rapidly evolving global trade landscape, including the protectionist policies seen during Donald Trump’s US presidency. This pushed both India and the UK closer, seeking more certainty amidst potential trade turmoil.
Navigating Political Hurdles
Despite renewed impetus post-2019, the path to the FTA was far from smooth. Political instability in London, stemming from Brexit in 2016, caused significant delays.
Negotiations continued under three different British Prime Ministers between 2022 and 2025. Several deadlines were missed, including the ambitious Diwali deadline set by former UK Prime Minister Boris Johnson.
The deal finally materialized following the landslide victory of the Keir Starmer-led Labour Party in May 2025, providing the necessary political stability to finalize the agreement.
What the Deal Means for Trade
The India-UK FTA is expected to provide extensive market access for goods across nearly all sectors. India stands to benefit from tariff elimination on approximately 99 percent of tariff lines, covering almost 100 percent of its trade value to the UK.
Key chapters of the pact cover goods, services, innovation, government procurement, and intellectual property rights. Additionally, a Double Contribution Convention Agreement (social security pact) has been concluded, preventing Indian professionals from making double contributions to social security funds when working in the UK.
The agreement will also ease mobility for professionals, including contractual service suppliers, business visitors, investors, and intra-corporate transferees. This includes independent professionals like yoga instructors, musicians, and chefs, further strengthening people-to-people ties.
Economic Impact and Future
In the 2024-25 fiscal year, India’s exports to the UK increased by 12.6 percent to $14.5 billion, while imports grew by 2.3 percent to $8.6 billion. Overall bilateral trade between the two nations saw a rise from $20.36 billion in 2022-23 to $21.34 billion in 2023-24.
While the Bilateral Investment Treaty (BIT) talks are still ongoing, the signing of this comprehensive FTA marks a new chapter. It promises to boost bilateral trade and investment, setting a precedent for India’s future trade engagements worldwide.
- The India-UK FTA is one of India’s most comprehensive trade agreements.
- It aims to integrate services sectors and provide market access for goods.
- The deal overcame years of political and negotiation challenges.
- It will ease professional mobility and eliminate tariffs on a wide range of goods.
This pact signifies a crucial step for both India and the UK as they navigate a shifting global economic landscape.
