India–UK Trade Deal
In a historic move that’s been three years in the making, India and the United Kingdom have finally signed the India–UK Comprehensive Economic and Trade Agreement (CETA), a landmark Free Trade Agreement poised to reshape bilateral trade, open up employment avenues, and lower costs for millions across both nations.
Signed on July 24, 2025, at Chequers in Buckinghamshire during Prime Minister Narendra Modi’s official UK visit, the agreement was formalised by India’s Commerce Minister Piyush Goyal and UK’s Secretary of State for Business and Trade Jonathan Reynolds, in the presence of UK Prime Minister Keir Starmer.
This sweeping trade pact, covering goods, services, investment, mobility, and public procurement, is projected to boost bilateral trade by $34 billion annually and marks the UK’s third major FTA post-Brexit.
The agreement is expected to usher in wide-ranging benefits for Indian businesses, professionals, consumers, and job seekers alike.
The most visible impact will be on the prices of imported goods from the UK. Key British exports such as cars, electric vehicles, cosmetics, soft drinks, chocolates, biscuits, lamb, salmon, and Scotch whisky will now be more affordable for Indian consumers:
Average tariffs on most goods will drop from 15% to 3%.
Electric vehicles, previously taxed at 110%, will see duties slashed to 10%, within a quota.
The import duty on whisky will drop from 150% to 75% immediately, and further down to 40% over 10 years.
These reductions mean everything from luxury British cars to everyday items like biscuits and chocolates will become significantly cheaper in Indian markets.
One of the most important features of the FTA is the opening up of 36 UK service sectors to Indian firms and professionals, without requiring an Economic Needs Test, a key hurdle until now.
Indian professionals in IT, financial services, architecture, engineering, consulting, and creative industries can now work in the UK for up to two years, even without having a physical office there. This move could directly benefit over 60,000 Indian IT professionals every year, particularly from companies like TCS, Infosys, HCL, Tech Mahindra, and Wipro.
Moreover, Indian workers will be exempt from UK social security contributions for up to three years, making overseas stints more financially attractive.
The trade agreement also offers pathways for contract-based professionals, including chefs, yoga instructors, musicians, and artists, to enter the UK job market with fewer administrative barriers.
The agreement includes tailored provisions to support young Indian entrepreneurs and recent graduates who wish to build careers in the UK, through streamlined visa policies and business support frameworks.
“This trade deal is more than just economics, it’s about people, ideas, and shared growth,” said Commerce Minister Piyush Goyal.
While the deal brings significant benefits to India, it also serves as a major strategic win for the UK, especially under the new Labour government’s “Plan for Change” economic vision.
UK exporters will enjoy tariff cuts on 90% of their exports to India. Over the next 10 years, 85% of tariff lines will be fully duty-free, giving British businesses better access to the world’s most populous market.
British manufacturers of medical devices, aerospace components, EVs, and food products will gain substantial pricing competitiveness in India — a market with expanding middle-class demand.
As UK Prime Minister Keir Starmer noted, “Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses, and drive growth in every corner of the country.”
The FTA grants British firms expanded access to India’s vast public procurement market, a space traditionally hard to penetrate for foreign entities. British companies can now bid on non-sensitive government tenders valued above ₹2 billion, estimated to include over 40,000 tenders annually worth approximately ₹4.09 lakh crore.
This provision is expected to enhance British participation in India’s infrastructure, energy, and urban development sectors.
The UK government estimates that the deal will create 2,200 new jobs domestically and boost British wages by £2.2 billion annually. Furthermore, UK consumers will benefit from lower prices on clothes, shoes, processed foods, and Indian-origin goods, thanks to reduced import costs.
The journey to this deal has been anything but straightforward. Negotiations, which began in January 2022, spanned over 15 rounds and included discussions on sensitive topics such as visa liberalisation, whisky tariffs, EV duties, carbon taxes, and social security.
Key milestones include:
May 2025: India and the UK agreed “in principle” after over three years of complex negotiations.
July 2025: Prime Ministers Modi and Starmer formally signed the FTA during a ceremonial visit.
Negotiation Hurdles: UK concerns around professional visas and India’s insistence on social security exemptions were major sticking points. These were finally resolved in early 2025, after both nations’ elections.
This FTA is not just about trade, it signals a deeper strategic alignment between two major democracies.
India has been steadily expanding its global trade architecture, signing FTAs with EFTA, and progressing deals with Australia, Canada, and the EU. For the UK, this marks its third major post-Brexit FTA after deals with Australia and New Zealand, and highlights its pivot toward Indo-Pacific partnerships.
The agreement is expected to serve as a foundation for a broader strategic partnership, with discussions underway to include energy security, climate change, and defence cooperation in future talks.
With the agreement now signed, both countries are working toward its ratification and implementation, expected by the end of 2025. A joint implementation task force will oversee phased execution of tariff reductions, service market openings, and mobility frameworks.
The real impact, however, will unfold over the next decade, as businesses recalibrate supply chains, professionals pursue new opportunities, and consumers enjoy greater access to global products.
From luxury cars and Scotch whisky to high-value tech jobs and procurement deals, the India–UK Free Trade Agreement represents a monumental win for both economies. It is not just a diplomatic achievement but a blueprint for economic diplomacy in the 21st century, one where mutual prosperity, inclusivity, and mobility take centre stage.
As tariffs fall, jobs grow, and borders blur for services, India and the UK are no longer just historical partners, they are now future-focused collaborators in a dynamic global economy.
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