India, UK Sign Landmark Free Trade Pact to Boost £25.5 Billion Trade Surge

 

In a historic move, India and the United Kingdom signed a landmark Free Trade Agreement (FTA) today, formalised in London in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer. Commerce Minister Piyush Goyal also joined the signing ceremony. The deal, finalised on May 6, 2025, is projected to grow annual bilateral trade by £25.5 billion, add £4.8 billion to the UK economy, and raise wages by £2.2 billion each year in the long term.

The FTA sets an ambitious goal of doubling trade to $120 billion by 2030, with an additional $40 billion expansion by 2040. Key provisions include India removing import taxes on leather, textiles, and footwear, while the UK slashes tariffs on whisky, gin, lamb, cosmetics, and farm goods. India will now permit UK car imports at just 10% duty, down from over 100%, raising domestic industry concerns.

UK firms gain access to India’s telecom, insurance, and banking sectors, though India secured only limited visa concessions. Additionally, UK companies can now bid for Indian central government contracts, possibly impacting local businesses. India has also accepted intellectual property rules exceeding WTO norms, sparking worries over affordable medicine access.

The deal emphasizes digital trade, paperless transactions, and mutual safety standard recognition, streamlining cross-border commerce. However, India failed to secure exemptions from the UK’s upcoming carbon taxes, potentially hurting steel and aluminium exports.

PM Modi, warmly received by the Indian diaspora in London, remarked on X, “This visit will go a long way in advancing the economic partnership between our nations... A strong India-UK friendship is essential for global progress.”