London: In a landmark moment that redefines post-Brexit Britain’s global trade outlook and signals India’s rising economic clout, Prime Minister Narendra Modi and UK Prime Minister Keir Starmer on Wednesday signed a long-anticipated Free Trade Agreement (FTA) during Modi’s state visit to London. The historic accord, finalised after over three years of intense negotiations, is set to significantly deepen economic ties between the two democracies and is being hailed as the most comprehensive trade pact Britain has entered into since its departure from the European Union.
The agreement introduces sweeping tariff reductions and paves the way for expanded access to each other’s goods and services markets. For Britain, which has been striving to revitalise its global trade links after Brexit, the deal offers strategic economic benefits, while for India, it presents a powerful platform to accelerate exports, gain mobility advantages for its workforce, and strengthen its presence in Europe’s financial and services hub.
Among the most notable features of the FTA is the reduction of India’s hefty 150% tariff on Scotch whisky, which will be gradually brought down to 40% over ten years. This is expected to substantially boost exports from the UK’s prized spirits industry. Indian tariffs on British-made electric vehicles and premium automobiles will also be trimmed to just 10% within a duty-free quota system. Simultaneously, India will enjoy duty-free access to 99% of its exports to the UK, covering major sectors such as textiles, gems and jewellery, auto components, chemicals, leather goods, and sports equipment.
The agreement is also being lauded for liberalising services and labour mobility long-standing Indian priorities. Britain has agreed to allow easier entry for Indian business travellers, contractual workers, chefs, yoga instructors, and IT professionals. Additionally, Indian workers posted to the UK for up to three years will be exempted from double social security contributions, a move that is projected to save Indian companies and professionals over ₹4,000 crore annually.
The pact is expected to add an estimated £4.8 billion to Britain’s GDP annually by the mid-2040s, while increasing bilateral trade by over £25.5 billion. India, too, stands to gain strategically by solidifying its export-led growth trajectory and diversifying beyond its traditional partners like the U.S. and UAE.
Both governments stressed that the agreement also opens new avenues for collaboration beyond trade especially in sectors like clean energy, climate change, defence cooperation, cyber security, and counter-terrorism. However, a separate bilateral investment treaty is still under negotiation and will follow in subsequent rounds.
Though signed with fanfare at a ceremonial event in London, the deal must still be ratified by India’s federal Cabinet and the UK Parliament before it can formally take effect. Ratification is expected later this year, following procedural reviews and legal formalities.
For Prime Minister Modi, the agreement is both an economic and diplomatic milestone, adding to his list of international achievements in his third term. For Prime Minister Starmer, it reinforces Britain’s pivot toward the Indo-Pacific and underlines Labour’s commitment to global trade renewal with trusted partners.
This historic accord thus not only enhances trade but also signifies the evolving geopolitical convergence between two major democracies. It sets a precedent for inclusive, growth-oriented partnerships in an era of rising global protectionism and strategic realignments.