India & UK Forge Historic Free Trade Agreement: Tariffs Slashed, Trade Set to Surge

India and the United Kingdom have signed a historic Free Trade Agreement (FTA) aimed at significantly boosting bilateral trade and investments between the two nations. The signing ceremony took place on July 24, 2025, with Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer leading the event at Chequers, near London.

The FTA is the first of its kind between India and the UK and comes after over three years of intensive negotiations. It is expected to boost annual trade by more than 30 billion dollars by 2040, while also creating new opportunities for businesses and professionals in both countries.

Key Highlights of the Agreement

The agreement eliminates tariffs on 99 percent of Indian exports to the UK, including textiles, apparel, gems and jewellery, pharmaceuticals, engineering goods, processed foods, and electronics. At the same time, Indian tariffs on several British goods will be reduced. For instance, the high tariff on Scotch whisky will be gradually reduced from 150 percent to 40 percent over the next decade. Tariffs on electric vehicles, cosmetics, and medical devices will also see significant reductions.

The UK government has predicted that this agreement will boost the UK economy by around 4.8 billion pounds annually, while India is expected to gain wider access to the British market and attract fresh investments across technology, manufacturing, and renewable energy sectors.

Focus on Clean Energy and Mobility

The deal has a strong focus on the clean energy sector, with both countries committing to support joint ventures in solar and wind energy projects. In addition, provisions for professional mobility have been included to allow Indian chefs, IT professionals, and skilled workers easier access to the UK job market.

Reactions from Leaders and Industry

Prime Minister Modi described the agreement as a turning point in the economic partnership between the two nations, saying that the FTA will open a new era of trade, innovation, and collaboration. Prime Minister Starmer called the signing a historic moment, emphasizing that the UK is ready to expand its global trade ties post-Brexit.

Business groups from both countries have welcomed the agreement. The Confederation of British Industry (CBI) praised the deal for its potential to increase opportunities for small and medium-sized enterprises, while Indian exporters believe that the FTA will make Indian goods more competitive in the UK market.

Future Roadmap

The agreement will now be ratified by both the Indian Parliament and the UK Parliament before it comes into full effect. Implementation is expected to begin within the next 12 months, after which both sides will monitor progress and address sectoral concerns such as services, intellectual property, and data protection.

Conclusion

The India-UK Free Trade Agreement is set to redefine economic relations between the two nations. With reduced tariffs, enhanced market access, and a focus on future-ready industries like clean energy and digital services, the FTA marks a major step toward deeper strategic and economic cooperation.