India-UK FTA: PM Modi, Starmer Sign Historic Free Trade Pact — Check Details
The UK FTA deal ensures a comprehensive market access to India across sectors such as textiles, leather, footwear, marine products, auto parts, engineering goods and chemicals.
Prime Minister Modi and his UK counterpart Kier Starmer on Thursday signed the historic free trade pact between the two countries, in a move that would enhance market access for various products between the nations.
The agreement will significantly reduce import duties and improve market access for goods and services on both sides. India’s average tariff on UK products will fall from 15% to 3%, easing entry for British exporters of soft drinks, cosmetics, cars and medical devices. Indian exports will also benefit from duty-free or preferential access across nearly all tariff lines.
India said the deal ensures comprehensive market access across sectors such as textiles, leather, footwear, marine products, auto parts, engineering goods and chemicals. It also secures one of the most ambitious UK commitments on services, including IT, financial and professional services, and education.
The agreement eases mobility for professionals and includes provisions for contractual service suppliers, intra-corporate transferees, and independent professionals such as chefs, musicians and yoga instructors. Indian workers temporarily in the UK will be exempt from social security contributions for three years under the Double Contribution Convention.
UK Investment And Trade Wins
The UK government said it welcomed nearly 6 billion pounds in new investment and export wins alongside the deal, supporting over 2,200 jobs across the country. About 4.8 billion pounds in trade gains are projected to boost growth across UK regions, particularly in aerospace, advanced manufacturing and technology.
Whisky tariffs will fall from 150% to 75% immediately and then drop to 40% over ten years. Aerospace product tariffs will be cut from up to 11% to zero, and automotive tariffs from as high as 110% will reduce to 10% under a quota. Electrical machinery tariffs will also fall from up to 22% to either zero or 50%.
The UK estimates exports to India will increase by nearly 60% over the long term, equivalent to 15.7 billion pounds in additional exports by 2040. Bilateral trade is projected to grow by 39%, or 25.5 billion pounds a year, relative to 2040 forecasts without the agreement.
Services, Clean Energy Access
India secured commitments for access in digitally delivered services, including architecture, engineering, and telecom services. The agreement binds India’s foreign investment cap in insurance and ensures equal treatment for UK financial services providers.
UK clean energy firms will gain new access to India’s procurement market as the country scales up renewable energy. Both sides also committed to addressing non-tariff barriers and improving regulatory transparency in line with India’s ongoing domestic reforms.
Strategic Partnership, Migration Framework
The two Prime Ministers also renewed the Comprehensive and Strategic Partnership, expanding cooperation in defence, education, climate, innovation and emerging technologies. This builds on the UK-India Technology Security Initiative signed a year ago.
The countries agreed to deepen cooperation on tackling organised crime, corruption and irregular migration. This includes a new criminal records-sharing agreement to support law enforcement, maintain watchlists and enforce travel bans.
Major Commercial Deals
Twenty-six British firms secured new business in India, and 18 Indian companies confirmed investment plans in the UK:
Airbus and Rolls-Royce will deliver aircraft and engines to Indian airlines in deals worth around 5 billion pounds, supporting jobs in Filton, Broughton and Derby.
Carbon Clean will invest 7.6 million pounds in a Mumbai innovation centre, creating 250 jobs in the UK and 100 in India.
DCube AI will invest 5 million pounds in the UK, creating 50 jobs in Manchester and London.
Occuity signed a 74.3 million pound export agreement with India’s Remidio Innovative Solutions to supply eye screening devices.
Johnson Matthey secured over 20 million pounds in contracts in India and will invest 4 million pounds to expand its operations there, supporting up to 20,000 Indian jobs during the construction phase.
Marcus Evans Group opened a global technology office in Mumbai, with a combined export and investment pipeline of 69 million pounds over five years.
LTIMindtree will invest 1 million pounds to expand in London and create over 300 jobs, including an AI lab.
Aurionpro will invest over 20 million pounds to set up a UK headquarters, generating more than 150 jobs and launching AI R&D labs in collaboration with UK universities.
The signing concludes a trade process that had seen multiple rounds of negotiations since its launch. Both countries say the agreement sets a benchmark for future trade frameworks between major economies.
