NEW DELHI: India and the UK signed a landmark Free Trade Agreement (FTA) on Thursday during Prime Minister Narendra Modi’s visit to London, sealing the most significant trade pact for Britain since Brexit and marking a major breakthrough in India’s global trade strategy.
The deal, finalised after three years of stop-start negotiations, cuts tariffs on key goods like textiles, whisky, automobiles, and electronics, and is expected to double the current bilateral trade of 56 billion by 2030.
Negotiated amid shifting global trade dynamics and rising protectionism, the India–UK Comprehensive Economic and Trade Agreement (CETA) opens up one of the world’s fastest-growing markets to UK firms while giving Indian exporters critical access to one of the G7’s leading economies. The agreement is set to take effect after a formal ratification process in the UK, likely within a year or less.
“This is a new chapter in the India–UK economic partnership,” said Prime Minister Narendra Modi. “CETA reflects our shared commitment to enhancing trade, driving inclusive growth, and creating opportunities for farmers, MSMEs, women, youth, and professionals,” Modi said at Chequers , his British counterpart Keir Starmer’s countryside residence 50 km northwest of London.
For India, the deal delivers duty-free access on 99% of its exports, spanning labour-intensive sectors such as apparel, marine products, footwear, and engineering goods. High-growth sectors like electronics, chemicals, and auto components are poised for major export gains. In return, India will slash tariffs on 90% of UK goods. The average tariff on UK exports will drop from 15% to 3%.
The UK, facing slower post-Brexit trade momentum, has touted the deal as its biggest trade success since leaving the EU. “This is the biggest and most economically significant trade deal the UK has made since Brexit,” British PM Keir Starmer said. “Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change,” he said.
Scotch whisky tariffs will be halved from 150% to 75%, and will fall further to 40% over 10 years. Auto tariffs will be phased down to 10%, while Indian EVs will gain access to the UK under a quota system. The deal enhances cooperation in services, clean energy, and finance. UK firms will gain locked-in access to insurance and financial sectors, while British clean energy companies will enter India’s public procurement market.
While the economic gain for the UK of an estimated 6.51 billion USD boost by 2040 is modest relative to losses from exiting the EU, the deal signals Britain’s pivot toward the Indo-Pacific. The pact indicates India’s growing leverage in shaping fairer, balanced trade terms with developed economies.
BIG TAKEAWAYS
Indian farmers to get preferential access to UK’s $37.5 billion agriculture market
Sensitive Indian sectors like dairy, vegetables, apples, cooking oils, oats fully protected under the deal
Big catch for Indian fishermen as the $5.4 billion British market opens for marine exports with zero duty as against up to 20% now
Big boost for UK job creation as labour-intensive sectors get competitive edge
Zero duty on major sectors
Massive gain for rural India and exporters with zero duty on processed foods as against up to 70% earlier
75,000 Indian workers in UK will benefit from Double Contribution Convention, as it exempts workers from social security contribution for three years
Professionals to get better mobility access to the UK. Up to 1,800 Indian chefs, yoga instructors and classical musicians can move temporarily to Britain to provide services
0% Duty on the following, down from 4-20% now
Marine products
Arms and ammunition
Base metals
Chemicals & Minerals
Electrical machinery
Plastic/Rubber
Furniture/Sports goods
Gems & jewellery
Headgear/Glass/Ceramic
Instruments/Clocks
Leather/Footwear
Wood/Paper
Mechanical machinery
Textile/Clothing
Transport/Auto
Veggies, fruits, spices, cereals & oils
Over 99%
Tariff lines down to zero duty for Animal products Processed food