India and the UK have signed a historic India UK FTA after resolving key differences in London. The deal removes or reduces tariffs on a wide range of goods—benefiting labour-intensive sectors like textiles and footwear—and opens new opportunities for UK exports in beverages, cosmetics, and machinery.
It also includes a long-sought provision easing social security norms for skilled Indian workers in the UK. The India UK FTA is expected to generate jobs, enhance trade, and deepen strategic economic ties between the two nations.
In a landmark development for global trade, India and the United Kingdom have concluded their long-anticipated Free Trade Agreement (FTA), following the latest round of negotiations in late April in London. The announcement, made on Tuesday, marks a pivotal moment in the economic partnership between the two nations. Prime Minister Narendra Modi called the agreement a “historic milestone,” while UK Prime Minister Keir Starmer described it as a “landmark trade deal.” Both leaders affirmed that the pact will significantly enhance bilateral trade, generate employment, and attract greater investment.
Key tariff concessions and sectoral impact
This India UK FTA is the first major deal India has wrapped up in the backdrop of a renewed global push for trade agreements and concerns over potential tariffs under US President Donald Trump. India is also negotiating deals with the US, EU, Chile, and Peru.
With the India UK FTA in place, the UK will eliminate tariffs ranging between 2–18% on several Indian exports such as footwear, textiles, automobile components, electrical machinery, minerals, and base metals. According to the Commerce and Industry Ministry, this move will directly benefit India’s labour-intensive sectors. However, to safeguard its domestic agricultural sector, India has kept items like dairy products, apples, and cheese outside the scope of tariff reductions.
One of the highlights of the India UK trade deal is the slashing of Indian tariffs on whiskey and gin from 150% to 75%, with further reductions to 40% over the next decade. The UK government also confirmed that Indian automotive tariffs would be reduced from 100% to 10%, but only under a specific quota. Additionally, tariffs on UK exports such as cosmetics, aerospace components, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits will be lowered, thereby expanding UK access to the Indian market.
While the textile and footwear industries welcomed the agreement for its potential to boost exports and employment, the alcoholic beverage sector voiced concerns. Industry representatives argued that the government had not fully addressed their requests and warned that similar agreements with the US and EU could harm the domestic alcoholic beverage sector.
Announcing the deal, Prime Minister Modi stated, “India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation for both our economies.”
Prime Minister Starmer echoed this sentiment, saying Britain had agreed to a “landmark trade deal” with India. “Fantastic news for British business, British workers, and British shoppers, delivering on our Plan for Change. Good to speak to Prime Minister @NarendraModi as we mark this historic moment,” he said.
Opportunities for skilled workers and services sector
The deal also includes the Double Contribution Convention, a long-pending demand from India. Under this provision, skilled Indian workers and their employers in the UK will be exempt from paying social security contributions for up to three years. Nasscom welcomed the move, stating that it would enhance access for Indian talent in the UK and open new avenues for professionals.
“The provision reflects the recognition of India’s strength in delivering high-quality services globally and reinforces the importance of mobility for Indian professionals in driving innovation and growth,” Nasscom noted.
In a statement, the Prime Minister’s Office in New Delhi highlighted that the two leaders had agreed to expand commercial ties and concluded a “balanced, equitable and ambitious” FTA. The agreement, covering trade in both goods and services, is expected to create employment, boost living standards, and improve citizen well-being across both countries.
From the UK side, the government called it a major economic victory. “Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has concluded since leaving the EU, and the most ambitious India has ever undertaken. Prime Minister Modi also thanked the Prime Minister for his decisive leadership in getting the deal over the line,” it said.
The announcement follows a string of high-level visits to the UK in April, including those by Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal. Both countries are also working towards concluding a Bilateral Investment Treaty (BIT) alongside the FTA.
India’s textile industry, which currently faces tariffs of up to 10% in the UK, stands to gain significantly from the deal. The agreement is expected to level the playing field for Indian textile exporters against competitors like Bangladesh. At the same time, deeper integration in the services sector could lead to further job creation in this high-growth area.
However, India remains concerned about the UK’s carbon tax, especially its potential impact on Indian metal exports. The UK has been reluctant to make concessions under its Carbon Border Adjustment Mechanism (CBAM). In response, India has proposed a ‘rebalancing mechanism’, which would require the UK to compensate Indian industries for any financial losses resulting from the regulation.
As the negotiations reached their final leg in April, the resolution of key issues such as rules of origin and short-term service visas played a critical role in sealing the agreement.
