By Vinod Popat
A Landmark Moment
On 24 July 2025, Prime Minister Narendra Modi and UK Prime Minister Sir Keir Starmer formally signed a historic Free Trade Agreement (FTA) at Chequers during Modi’s two-day visit . This represents the first comprehensive trade deal between India and a European nation and marks the UK’s most substantial post‑Brexit bilateral trade pact .
Key Provisions & Economic Impact
- UK tariffs on Indian goods: phased reduction, with tariff removals on 90% of UK tariff lines, 64% immediate zero duties, and 85% within 10 years .
- Indian tariffs on UK imports: cut from around 15% to just 3%, benefiting sectors like whisky, cosmetics, cars, and chocolates .
- Alcohol industry: Indian duties on Scotch whisky and gin will fall from 150% to 75% immediately, and to 40% over 10 years .
- Automobiles: duties slashed from over 100% to 10%, with a quota system .
- Agriculture and consumer goods: reductions on chocolates, salmon, lamb, cosmetics, and machinery
- Services and people mobility: comes with the Double Contribution Convention, allowing Indian professionals (e.g., yoga instructors, artists) 1800 visas and exemptions from UK National Insurance on transfers for up to three years, extended over previous agreements .
Projected Gains
- UK economy: expected growth of £4.8 billion in GDP annually by 2040, along with £6 billion in investments, including Airbus/Air India deals ◆ works out to around 2,200 new UK jobs across sectors .
- India’s gains: tariff-free access for 99% of Indian tariff lines, covering nearly all trade value, with bilateral trade potentially doubling to USD 120 billion by 2030, and adding USD 25 billion to trade each year by 2040 .
Strategic Significance
• Deepens strategic ties: Viewed as a blueprint for future trade pacts with advanced economies .
• Industry endorsement: Urged as a “transformational milestone” by the Confederation of Indian Industry and supported by major business bodies .
• Beyond tariffs: Covers digital trade, intellectual property, regulatory alignment, and other modern trade architecture initiatives .
Next Steps & Ratification
• The legal text, previously finalized in May 2025, is now formally signed .
• It requires parliamentary ratification in both countries; UK ratification could take up to a year.
• Expected to enter into force by early 2026 .
Modi’s Message
At the signing ceremony, PM Modi asserted that the FTA is a “blueprint for shared prosperity” and characterized the UK and India as “natural partners writing a new chapter in history.” Starmer echoed optimism, noting Britain is “open for business” .
✅ In Summary
PM Modi’s visit on 24 July 2025 marks the historic ratification of the India–UK FTA, cementing a strategic economic partnership. With sweeping tariff cuts, service liberalisation, and mutual investment, this deal is poised to reshape bilateral trade—driving growth, employment, and innovation.
