India–UK Free Trade Agreement Marks New Era in Bilateral Ties and Economic Growth

India and the United Kingdom have formally concluded a landmark Free Trade Agreement (FTA) that promises to revolutionize the economic relationship between the two democracies. Announced jointly by the Hon’ble Prime Minister of India, Shri Narendra Modi, and the Hon’ble Prime Minister of the United Kingdom, Sir Keir Starmer, this ambitious and forward-looking trade pact is being hailed as a transformative milestone that aligns with India’s Viksit Bharat 2047 vision and the UK’s post-Brexit global strategy.

Building on Strategic Dialogue and Shared Vision

The roots of the agreement trace back to high-level discussions between the two Prime Ministers on the sidelines of the G-20 Summit held in Rio de Janeiro, Brazil, in November 2024. These diplomatic engagements were followed by a robust phase of negotiations starting in February 2025. Ministerial and technical teams led by India’s Commerce and Industry Minister Shri Piyush Goyal and the UK’s Secretary of State for Business and Trade, Mr. Jonathan Reynolds, spearheaded the comprehensive talks that ultimately resulted in this modern FTA.

A Dual Achievement: FTA and Double Contribution Convention

Prime Minister Modi, in a statement on social media platform X (formerly Twitter), described the FTA and the accompanying Double Contribution Convention as “landmark agreements” that will boost bilateral trade, investments, job creation, and innovation. The Convention notably provides an exemption from social security contributions in the UK for Indian workers and their employers for up to three years—a significant cost-saving and competitiveness-enhancing provision.

Shri Piyush Goyal expressed deep gratitude to Prime Minister Modi, underlining the significance of the agreement for Indian stakeholders ranging from MSMEs to startups and service professionals. He emphasized that the deal respects and protects India's core interests while opening doors to greater participation in global value chains.

Key Features of the India–UK FTA

1. Comprehensive Market Access for Goods: The FTA provides tariff elimination on approximately 99% of the tariff lines, covering nearly 100% of the bilateral trade value. This sweeping liberalization will greatly benefit Indian exports in sectors like:

• Textiles and garments

• Marine products

• Leather and footwear

• Sports goods and toys

• Gems and jewellery

• Engineering goods, auto parts, and engines

• Organic chemicals

These concessions are expected to significantly improve India’s export competitiveness in the UK market, especially when compared to other countries.

2. Services Sector Breakthroughs: The FTA is equally robust in its services commitments. India has secured some of the most ambitious terms ever offered by the UK, especially in:

• IT and IT-enabled Services (ITeS)

• Financial and professional services

• Educational services

• Architecture, engineering, and computer-related services

These provisions will boost the digital economy and create avenues for Indian professionals to thrive in the UK’s advanced services sector.

3. Enhanced Mobility and Talent Opportunities: New liberalized visa provisions will ease the movement of:

• Contractual Service Suppliers

• Intra-Corporate Transferees and their families

• Business visitors and investors

• Independent professionals such as yoga instructors, chefs, musicians, and others

This is a significant win for India’s skilled workforce and professional community.

4. Double Contribution Convention: This unique provision exempts Indian professionals and their employers from paying UK social security contributions for a period of three years. This not only results in financial savings but also enhances India’s service sector competitiveness.

5. Addressing Non-Tariff Barriers and Enhancing Transparency: India has ensured that non-tariff barriers (NTBs) are tackled effectively to enable seamless movement of goods and services. The FTA includes chapters on good regulatory practices, mutual recognition, and standards harmonization, in line with India’s domestic reforms aimed at enhancing ease of doing business.

A Gold Standard for Future FTAs

According to Commerce Secretary Shri Sunil Barthwal, the India–UK FTA is the most comprehensive free trade agreement ever signed by India and serves as a gold standard for future negotiations with other countries. It promotes equitable and sustainable trade, inclusive economic development, and deep integration into global supply chains.

The bilateral trade, which currently stands at around USD 60 billion, is projected to double by 2030 as a result of this agreement. Enhanced market access, transparent regulations, and strong digital infrastructure are set to create high-quality employment opportunities in both countries, particularly in India’s growing digital and manufacturing ecosystems.

Reinforcing Strategic and Democratic Bonds

This agreement signifies more than just economic cooperation—it is a reaffirmation of the shared democratic values and strategic priorities of India and the UK. As global innovation hubs and leading democracies, both nations are poised to collaborate on addressing common challenges, from climate change and supply chain resilience to digital governance and global health.

The India–UK Free Trade Agreement is a historic and future-focused pact that deepens the economic partnership, widens opportunities for trade and talent, and sets a strong precedent for global trade diplomacy. It symbolizes a win-win approach to globalization that respects domestic priorities while embracing international cooperation.