
India, UK Sign Landmark Free Trade Deal
India and the United Kingdom have signed a major Free Trade Agreement (FTA), marking a new chapter in bilateral economic ties. The agreement was finalized during Prime Minister Narendra Modi’s visit to the UK on July 24, 2025, after nearly three years of negotiations.
Tariff Reductions on Key Goods
Under the new deal, India will eliminate tariffs on 99% of UK exports, including machinery, cosmetics, whisky, and medical equipment. In return, the UK will reduce tariffs on a wide range of Indian goods such as textiles, leather products, seafood, and jewelry. The deal also includes a phased reduction in tariffs on Scotch whisky, from 150% to 75% immediately and then down to 40% over a decade. Similarly, import duties on British cars will drop from over 100% to 10% within specified quotas.
Boost to Bilateral Trade
The agreement is expected to increase annual trade between the two nations by up to $34 billion by 2040. UK officials estimate their economy could benefit by nearly £4.8 billion per year. For India, this is the most significant trade pact with a Western nation, and for the UK, it is the largest since its exit from the European Union.
Focus on Services and Mobility
Beyond goods, the deal improves access to service sectors and includes provisions to allow Indian chefs, yoga instructors, and musicians to work in the UK on short-term visas. It also enables British firms to bid for non-sensitive Indian government contracts. A social security agreement ensures Indian workers won’t pay double contributions in the UK.
Implementation Ahead
The FTA will now go through parliamentary approvals in both countries and is expected to come into force by mid-2026. Sensitive sectors such as agriculture and carbon-related taxes were kept outside the agreement to address domestic concerns.