Updated 24 July 2025 at 16:04 IST
PM Modi Signs Historic India-UK Free Trade Deal: How It Is Win-Win Deal For Both Countries
India and the UK signed their long-awaited Free Trade Agreement on Thursday, which will boost bilateral trade by around $34 billion annually.
India and the United Kingdom have signed a major Free Trade Agreement (FTA) that is expected to boost trade between the two countries by about $34 billion every year. This deal is the most important trade agreement India has ever signed and marks a big step for the UK as well, being its largest trade deal since Brexit.
For the UK’s new Prime Minister, Keir Starmer, it’s a key moment to revive the country’s slowing economy. For India, it shows a strong willingness to open its market and attract more global investment.
"It is a deal that will bring huge benefits to both of our countries, boosting wages, raising living standards, and putting more money in the pockets of working people. It is good for jobs, it is good for business, cutting tariffs and making trade cheaper, quicker, and easier," said UK PM Keir Starmer.
“Today marks a historic day in our relations. I am delighted that after the hard work of several years, today our two nations have signed the Comprehensive Economic and Trade Agreement,” said PM Narendra Modi.
How It Is Win-Win Deal For Both Countries
The trade agreement, officially called the Comprehensive Economic and Trade Agreement (CEPA), was finalised in May 2025 after nearly three years of talks. It is being signed in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer on July 24.
Once both countries ratify it, the deal will reduce trade barriers and lower import duties, making it easier for businesses to trade goods and services between India and the UK. The agreement will especially benefit Indian exporters, with 99% of Indian exports to the UK becoming duty-free.
This covers key areas like textiles, footwear, marine products, gems and jewellery, engineering goods, auto parts, and organic chemicals. Indian export organisations believe this will open new opportunities and help boost trade significantly.
India-UK Are Key Trading Partners
In the financial year 2023–24, trade between India and the UK reached $55 billion. With this agreement, both countries hope to increase that number to $120 billion by 2030. As part of the deal, India will reduce tariffs on 90% of UK products, bringing the average duty down from 15% to just 3%.
High duties on Scotch whisky will fall from 150% to 75% immediately and then gradually to 40% over ten years. British car imports, which currently face over 100% duty, will also see reduced tariffs, though through a limited quota system. In return, Indian electric and hybrid vehicle makers will gain access to the UK market, also under quotas.
India and the UK already share strong investment ties. The UK is India’s sixth-largest foreign investor, having put in around $36 billion so far. At the same time, about 1,000 Indian companies operate in the UK, employing over 100,000 people and investing nearly $20 billion into the British economy.
The agreement also supports the trade of services in areas such as IT, finance, education, and architecture. It will make it easier for Indian professionals to work in the UK. A key part of the deal includes a three-year exemption from UK social security payments for temporary Indian workers and their employers. This will save money for Indian workers posted in the UK.
Concerns from Trade Deal
However, there are some concerns about the impact of the agreement. Critics worry that cheaper imported British cars could hurt India’s domestic auto industry and go against the 'Make in India' campaign. Some issues, like carbon taxes and auto quotas, are still being worked out and will be dealt with separately.
Published By : Anubhav Maurya
Published On: 24 July 2025 at 16:04 IST