In a landmark move, India and the United Kingdom signed the India-UK Free Trade Agreement (FTA) on Thursday during Prime Minister Narendra Modi’s visit to the UK, where he met with his British counterpart Keir Starmer. The agreement was formalised by Commerce Minister Piyush Goyal and UK Trade Secretary Jonathan Reynolds, marking the conclusion of negotiations that had been underway for three years.
The comprehensive trade pact is expected to raise bilateral trade between the two countries by $34 billion annually, opening up new avenues for economic growth, employment, and skill development, particularly for Indian professionals.
Prime Minister Starmer called the agreement “a major win for Britain,” stating, “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.”
Tariff Reductions, Job Creation and Market Access for Both Countries
Under the deal, 26 British companies have announced new business ventures in India. Indian industries will now have access to UK-made medical devices and aerospace parts at lower costs. Tariffs on British soft drinks, chocolates, cosmetics, biscuits, lamb, salmon, and cars will drop significantly—from an average of 15% to 3%, while electric vehicles will see a reduction from 110% to 10% within a quota.
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Tariffs on UK whisky will be cut from 150% to 75% immediately, and further down to 40% over the next ten years, making it easier for British exporters to enter the Indian market.
The agreement also removes barriers for Indian service providers. Indian professionals and firms will gain access to 36 UK service sectors without undergoing an Economic Needs Test. This will allow Indian professionals to work in 35 sectors for two years, even without establishing an office in the UK. The Indian Commerce Ministry estimates this move could benefit over 60,000 IT professionals annually, including employees of firms like TCS, Infosys, Tech Mahindra, HCL Technologies, and Wipro.
Indian professionals will also be exempted from UK social security contributions for three years, and contract-based workers such as chefs, yoga instructors, and musicians will gain better entry into the UK job market.
From the UK’s perspective, the FTA will lead to tariff cuts on 90% of Indian goods, with 85% of tariffs phased out within a decade. British businesses will gain broader access to India’s public procurement market, with the ability to bid on non-sensitive government tenders valued above Rs 2 billion. This translates to access to approximately 40,000 tenders annually, worth a total of Rs 4.09 lakh crore.
The UK expects to create over 2,200 jobs directly as a result of the deal, with annual wage gains estimated at £2.2 billion. British consumers are also set to benefit from cheaper prices and increased variety in clothing, footwear, and food products.
