The United Kingdom and India have signed a landmark Free Trade Agreement (FTA) valued at nearly £6 billion, marking the most economically significant UK trade pact since Brexit. Prime Minister Sir Keir Starmer and Indian Prime Minister Narendra Modi formalised the deal at Chequers, the UK Prime Minister’s official country residence. The agreement is expected to boost bilateral trade by approximately £25.5 billion annually by 2040 and generate more than 2,200 new jobs in the UK.
The FTA delivers substantial tariff reductions across a wide range of sectors. UK whisky exports will see immediate import duty cuts from 150% to 75%, decreasing further to 40% by 2035. Tariffs on other British exports such as luxury cars, aerospace parts, cosmetics, and medical devices will also drop, with average levies on UK goods falling from 15% to 3%. Indian exports to the UK including textiles, footwear, seafood, jewellery, and engineering goods will benefit from enhanced market access and lower import costs.
The agreement has been in negotiation since 2022 and was approved by the Indian cabinet earlier this week. It now awaits ratification by the UK Parliament, with implementation expected within the next year. Starmer described the deal as a “major win for Britain,” highlighting its role in supporting high-growth sectors such as aerospace, clean energy, and advanced manufacturing. The FTA includes a reciprocal social security exemption that will prevent double contributions for temporarily transferred workers.
UK-India deal to reduce tariffs and expand market access
Staff from both countries will only pay social security in their home nation. This provision, while previously criticised by opposition parties, mirrors agreements already in place with 17 other countries. Business Secretary Jonathan Reynolds emphasized that there is no cost advantage to hiring foreign workers over British employees under this deal. India stands to gain greater access to UK goods and services, with particular focus on clean energy, financial services, and high-end manufacturing inputs. Indian companies will also be able to expand their presence in the UK, with over 26 firms confirming investment plans.
Key deals include Airbus and Rolls-Royce aircraft deliveries worth £5 billion, and investments by tech firms such as Zerowatt Energy, DCube AI, and Aurionpro. These ventures alone will create thousands of jobs in the UK. The agreement also enhances collaboration in defence, education, technology, and climate action. The two governments have committed to stronger cooperation in tackling organised crime, illegal migration, and corruption. A forthcoming criminal records sharing agreement will further aid cross-border enforcement and judicial processes.
The trade pact reflects India’s growing stature in global commerce and diplomacy, driven by Prime Minister Modi’s leadership in advancing the country’s economic ambitions. His administration’s strategic focus on international trade and investment has elevated India’s position as a reliable and influential global partner. As India continues its trajectory toward becoming the world’s third-largest economy, the agreement with the UK underscores its expanding role in shaping the future of global economic cooperation. – By EuroWire News Desk.
