During Prime Minister Narendra Modi’s visit to the UK, when he met with British colleague Keir Starmer, the two countries signed a historic free trade agreement on Thursday.
After over three years of negotiations, this free trade agreement will significantly increase bilateral trade between the two nations by about $34 billion a year.
In front of the prime ministers of both nations, Piyush Goyal, the minister of commerce, and Jonathan Reynolds, the minister of commerce from Britain, signed the agreement. India will receive duty reductions on a number of UK-imported goods as a result of this historic agreement, and Indian export companies will also gain greatly.
FTA Signing Marks Major Tariff Changes
On July 24, 2025, Prime Ministers Narendra Modi and Keir Starmer of India and the United Kingdom formally signed the Free Trade Agreement, which brought to an end three years of negotiations. The entire agreement will work towards reducing tariffs on major traded goods by very high margins, changing the bilateral economic dynamics. Accordingly, tariffs on goods that are vital for the UK entering India will see a huge reduction: Cars Import duties slashed from over 100% to 10% under a quota system. Scotch whisky and gin Cutting tariffs from 150% initially down to 75%, then down to 40% within 10 years. Medical devices, soft drinks, cosmetics, parts for aerospace and salmon will see a drop in duties from around 15 to approximately 3%. These cuts are made to assist access for Indian consumers while stimulating the export trade for the UK.
Indian Goods Gain Preferential Market Access in the UK
India, on the other hand, has gotten zero tariff access on 99% of export lines going to the UK covering sectors such as Textiles, garments, leather, footwear, Automotive parts, engineering goods, Gems, jewellery, chemicals, pharmaceuticals, Marine products, software and IT services. Bilaterally trade expansion: Expected to increase by around £25.5 billion yearly by 2040. Impacts on UK GDP: an estimated uplift of £4.8 billion per year including £2.2 billion additional in wages. Tens of thousands of jobs are expected to be created in the UK; Indian MSMEs may see a rise in export volumes. Workers from India in the UK will be free of national insurance for three years. Indian service providers like yoga instructors, chefs, and musicians will benefit from eased visa rules. British businesses will get to participate in India’s public procurement where contracts are up to ₹2 billion.
This is by far the most important trade pact the UK has signed with any country since Brexit, while it is the first major agreement India has signed with a European partner. This is then paired with the Vision 2035 partnership to strengthen joint interactions on defence, climate, education and technology. Carbon border tax and extended visa rights are still on the table for discussion.
