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Bilateral trade between India and the UK increased to $21.34 billion in 2023-24 from $20.36 billion in 2022-23. The average duty on goods imported from India into the UK is 4.2%
Prime Minister Narendra Modi and UK counterpart Keir Starmer announced that their respective nations have agreed to a free trade agreement. (IMAGE: REUTERS FILE)
The Prime Ministers of India and the United Kingdom announced on Tuesday that both nations have completed a free trade agreement. Prime Minister Narendra Modi in a social media post welcomed the successful conclusion of the India–UK Free Trade Agreement along with the Double Contribution Convention.
“Prime Minister Shri Narendra Modi and Prime Minister of the United Kingdom H.E. Sir Keir Starmer had a telephone conversation today. The two leaders welcomed the successful conclusion of an ambitious and mutually beneficial India–UK Free Trade Agreement along with the Double Contribution Convention,” a statement released by the government said.
The UK Prime Minister, Keir Starmer, reacted to the signing of the trademark deal by saying that “strengthening alliances and reducing trade barriers with economies around the world is part of their Plan for Change to deliver a stronger and more secure economy”.
As per Narendra Modi’s post on social media, both Prime Ministers also spoke over the telephone. “Delighted to speak with my friend PM Keir Starmer. In a historic milestone, 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 in both our economies,” PM Modi said in a social media post on X.
NEWS: The UK and India have agreed a landmark free trade deal to make working people and businesses better off in both our countries 🇬🇧🤝🇮🇳Delivering on our Plan for Change to grow the economy, raise living standards, and put money back in people’s pockets. pic.twitter.com/h88m5SscCH
— UK Prime Minister (@10DowningStreet) May 6, 2025
He also invited his English counterpart to India for a visit. “I look forward to welcoming PM Starmer to India soon,” he said.
Starmer’s office in a social media post said: “The UK and India have agreed a landmark free trade deal to make working people and businesses better off in both our countries. Delivering on our Plan for Change to grow the economy, raise living standards, and put money back in people’s pockets”.
Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, 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…— Narendra Modi (@narendramodi) May 6, 2025
Bilateral trade between India and the United Kingdom rose to USD 21.34 billion in 2023-24, up from USD 20.36 billion the previous year. Currently, goods imported from India into the UK attract an average tariff of 4.2 per cent.
According to economic think tank GTRI, the new trade pact is expected to benefit several Indian exports, including textiles, garments such as shirts, trousers, and dresses, as well as bed linen, footwear, carpets, automobiles, marine products, grapes, and mangoes, all of which currently face low to moderate import duties in the UK market.
In FTAs, two countries either eliminate or significantly reduce customs duties on maximum goods traded between them. They also ease norms for promoting trade in services and bilateral investments.
What Both Nations Stand To Gain From The FTA
An Indian government press release said that India stands to gain from the trade pact as the UK agreed to scrap tariffs on nearly 99% of tariff lines, essentially covering all trade by value.
The agreement is also set to give a big push to India’s manufacturing, the press release said, with labour and tech-heavy sectors expected to see an uptick.
Key exports like textiles, leather, marine products, gems and jewellery, footwear, toys, sports goods, auto parts, and organic chemicals will now have an edge in the UK market, levelling the field against global competition.
The UK government in its press release, in a note to editors, said: “Barriers to trading will be dropped, with India agreeing to reduce tariffs on a whole host of products including whisky, medical devices, advanced machinery, and lamb, making UK exports more competitive. Based on 2022 trade alone, this amounts to India cutting tariffs worth over £400 million when the deal comes into force, which will more than double to around £900 million after 10 years”.
The Indian government press release highlighted that the agreement is set to create significant employment opportunities in India. It said that one of its standout features is the UK’s ambitious commitments in services, including IT/ITeS, financial, professional, and educational services and said that this will unlock fresh avenues for jobs and growth.
The statement highlighted that the agreement also simplifies mobility for professionals, such as contractual service suppliers, business visitors, investors, intra-corporate transferees and even independent professionals like yoga instructors, musicians and chefs, offering them the right to work and expand their reach.
“Immense opportunities for talented and skilled Indian youth will open up in the UK which is a major global centre for digitally delivered services due to its strong financial and professional services sectors and advanced digital infrastructure,” the press release said.
It also pointed out that India secured significant commitments on digitally delivered services for Indian service suppliers, specially in professional services such as architecture and engineering, computer related services and telecommunication services.
“The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market that would create new job opportunities as well as benefit large number of Indians working in the UK,” the press release pointed out.
The UK government press release pointed out that the trade deal will deliver for high-growth sectors and be beneficial for the advanced manufacturing sectors from aerospace and automotive, electrical circuits and conductors and also provide a boost to the UK’s clean energy industry.
“Tariffs cut on the UK’s large and varied advanced manufacturing sectors from aerospace and automotive, electrical circuits and conductors, and high-end optical products. The clean energy industry will have brand new, unprecedented access to India’s vast procurement market as the country makes the switch to renewable energy and continues to see growing energy demand,” it said.
The press release also highlighted the reduced tariffs on medical devices “will unleash new opportunities for the UK life sciences sector”.
“The UK will benefit from the best India has to offer with British shoppers enjoying access to a greater variety of clothes and shoes. New commitments will also help protect consumers from spam texts from India, which could include requiring opt-out or prior consent,” the release from 10 Downing Street said.
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