“India and the United Kingdom are set to officially sign a landmark Free Trade Agreement during Prime Minister Narendra Modi’s state visit to the UK on July 24, 2025.” The deal, concluded after three years of negotiations, is expected to significantly enhance economic cooperation and bilateral trade, making it the most comprehensive trade pact for both nations in recent years.
Under the agreement, both countries have agreed to substantial tariff reductions across multiple sectors. The UK will see tariffs reduced on around 90 percent of its export items to India, with 64 percent of them becoming duty-free immediately. This includes a major reduction in tariffs on iconic UK products such as Scotch whisky and gin, with current duties of 150 percent being cut to 75 percent immediately and then phased down to 40 percent over ten years. High-end UK automobiles, currently taxed at over 100 percent, will benefit from reduced duties as low as 10 percent under specified quotas. Other British exports set to benefit include cosmetics, medical devices, salmon, chocolate, and aerospace components.
India, on the other hand, will enjoy zero-duty access to 99 percent of its exports to the UK. Key sectors such as textiles, garments, footwear, gems, jewelry, machinery, and chemicals are expected to benefit immensely, particularly aiding small and medium-scale industries across the country. The deal also includes provisions for services and labor mobility, easing visa access for Indian professionals such as chefs, musicians, yoga instructors, and contractual service providers. Furthermore, Indian workers temporarily employed in the UK will be exempt from national insurance contributions for up to three years, potentially saving Indian firms and workers an estimated ₹40 billion annually.
The agreement also opens up India’s federal procurement market, worth an estimated £38 billion annually, to UK firms. In return, Indian companies gain improved access to UK public tenders. Provisions have also been included to boost cooperation in insurance, financial services, and mutual recognition of professional qualifications.
The economic benefits projected from the deal are significant. The UK anticipates an annual GDP increase of approximately £4.8 billion, while India aims to double bilateral trade to nearly \$120 billion by 2030. Trade volumes could rise by over £25 billion by 2040. Indian industries such as apparel, auto parts, chemicals, and engineering are expected to gain considerable momentum, while UK sectors like alcoholic beverages, automotive manufacturing, and healthcare devices are set to expand their market share in India.
However, the agreement still requires formal ratification by the UK Parliament, which is anticipated within the coming year. While India’s Cabinet has already given its approval, ongoing negotiations will address unresolved issues related to legal and financial services, carbon tax compatibility, and investment protections under a separate treaty. The phased implementation of the agreement over the next decade means that its full impact will unfold gradually, depending on how efficiently businesses adapt and capitalize on the new market access and trade terms.
The signing of this agreement marks a historic milestone, reflecting a shared commitment to deepening economic ties and creating a powerful trade corridor between India and the UK in the post-Brexit global landscape.