In a landmark development, India and the United Kingdom have finalized a comprehensive free trade agreement (FTA) on May 6, 2025, marking a significant milestone in bilateral relations. This agreement, concluded after three years of intermittent negotiations, aims to bolster trade between the world's fifth and sixth-largest economies by £25.5 billion ($34 billion) by 2040.

Key Highlights of the Agreement:

Tariff Reductions: India will reduce tariffs on 90% of British goods, including notable cuts on whisky tariffs from 150% to 40% over a decade. Automobile tariffs will also see a substantial decrease from over 100% to 10%.

Market Access: The UK will grant duty-free access to 99% of Indian exports, benefiting sectors like textiles, marine products, leather, and auto parts.

Services and Mobility: British firms will gain greater access to Indian public procurement contracts, while Indian professionals will find it easier to work in the UK under a new social security agreement that exempts temporary workers from dual contributions for three years

This FTA is the UK's most significant trade deal since its exit from the European Union in 2020, reflecting its post-Brexit strategy to forge stronger ties with emerging economies. For India, the agreement signifies a willingness to open traditionally protected sectors and integrate more deeply into global trade networks.

The successful conclusion of the FTA also sets the stage for further cooperation, with British Prime Minister Keir Starmer accepting an invitation from Indian Prime Minister Narendra Modi to visit India, signaling a commitment to deepen bilateral relations.

As both nations look to the future, this agreement is poised to serve as a cornerstone for enhanced economic collaboration, fostering growth, innovation, and mutual prosperity.