The signing of the India UK Free Trade Agreement (FTA) on 24 July 2025 represents one of the most significant milestones in recent global trade history. Officially known as the India–United Kingdom Comprehensive Economic and Trade Agreement (CETA), this landmark accord not only cements stronger bilateral ties between India and the UK but also signals a new chapter for global trade partnerships.
Negotiated over more than three years and across multiple rounds in London, New Delhi, and virtual sessions, the agreement was finally concluded during Prime Minister Narendra Modi’s visit to the UK, where he met Prime Minister Keir Starmer at Chequers, Buckinghamshire. For India, this deal is about more than numbers, it is about strategic positioning in a world where global trade alliances are shifting rapidly. For the UK, it is a crucial step in its post-Brexit economic strategy. And for the USA, while not a direct participant, the deal signals a significant realignment of trade flows that could have ripple effects on transatlantic commerce.
The Long Road to the Agreement
The origins of this agreement can be traced back to May 2021, when then UK Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi agreed to pursue a deeper trade partnership. Formal negotiations began in January 2022, with an initial target of completing by Diwali that year. However, the complexities of the deal including sensitive discussions on mobility visas, tariffs on whisky and cars, and social security for Indian workers delayed progress.
Across 15 formal rounds of negotiations, the talks addressed 26 chapters covering goods, services, investments, intellectual property, rules of origin, and sensitive issues such as Scotch whisky tariffs and the UK’s planned carbon border tax.
The breakthrough finally came in May 2025, when both countries announced an agreement in principle. Less than two months later, on 24 July 2025, the deal was formally signed, accompanied by the launch of the India-U.K. Vision 2035, a strategic roadmap for deeper cooperation across trade, defence, technology, education, clean energy, and cultural exchange.
Key Features of the India UK Free Trade Deal
Unprecedented Tariff Reductions
At the heart of the deal lies a bold promise:
- 99% of Indian exports to the UK will now be duty-free, covering nearly all trade value.
- India, in return, will reduce duties on 90% of UK tariff lines, with 85% reaching zero-duty status within 10 years.
This means that industries long constrained by high tariffs, from textiles to pharmaceuticals can now expand their presence in each other’s markets.
Transformational Gains for Indian Sectors
Agriculture and Rural Economy
Over 95% of agricultural tariff lines are now zero-duty, covering a range of exports including fruits, vegetables, pulses, spices, jackfruit, millets, and organic herbs. This shift is expected to raise India’s agri-exports by 20% in just three years, supporting its broader goal of achieving $100 billion in agri-exports by 2030. Sensitive items such as dairy, apples, and edible oils remain protected to safeguard local farmers.
Marine Products
Tariffs have been eliminated on shrimp, tuna, and fishmeal, opening a $5.4 billion opportunity for India’s coastal states. With India currently holding only 2.25% of the UK’s marine imports, the growth potential is enormous.
Textiles and Apparel
The agreement covers more than 1,143 textile product categories, all of which are now duty-free. Ready-made garments, carpets, handicrafts, and home textiles are poised for rapid growth, with projections of India gaining 5% more of the UK market, a significant boost that levels the playing field against competitors like Bangladesh and Cambodia.
Pharmaceuticals and Medical Devices
Tariffs on generic medicines and medical devices have been scrapped. India, which currently exports $1 billion worth of pharmaceuticals to the UK against a UK import market of $30 billion, can now aim to dramatically expand its footprint. Medical devices such as ECG machines, surgical equipment, and X-ray systems will also benefit.
Engineering Goods
India’s engineering exports to the UK currently stand at $4.28 billion, compared with the UK’s global imports of $193.5 billion. With duties as high as 18% now eliminated, Indian engineering exports are expected to surge, potentially doubling to $7.5 billion by 2030.
Gems and Jewellery
With jewellery exports projected to double within two to three years, India is set to capture a major share of the UK’s $3 billion jewellery market.
Leather and Footwear
Duties of 16% have been scrapped, opening the door for India’s footwear hubs in Agra, Kanpur, Kolhapur, and Chennai to push exports beyond $900 million.
Chemicals and Plastics
Exports of chemicals are expected to rise by 30–40% to reach $750 million in FY26. The plastics sector, targeting films, sheets, and kitchenware, has set a goal of 15% growth.
Services, Professionals, and Labour Mobility
Beyond goods, the India UK trade deal offers unparalleled advantages in the services sector:
- 75,000 Indian workers will be exempt from UK social security contributions for three years under the Double Contribution Convention, ensuring they don’t pay into both systems.
- 35 UK sectors have been opened to Indian professionals without an Economic Needs Test.
- Indian chefs, yoga trainers, and artists will be welcomed annually, with 1,800 cultural professionals permitted each year.
Regional Impact: Indian States that Will Benefit Most
The benefits of the India UK FTA will not be evenly distributed as some states stand to gain more than others based on their industrial strengths.
- Maharashtra: Positioned to lead in engineering goods and pharmaceutical exports.
- Gujarat: Set to expand its pharmaceutical and seafood industries.
- Tamil Nadu: Expected to see strong growth in textiles and leather exports.
- Kerala and West Bengal: Beneficiaries of increased demand for marine products.
- Punjab and Uttar Pradesh: Anticipated gains in agriculture, particularly fruits and vegetables.
By driving growth at both the state and national levels, the FTA could reshape India’s economic geography.
Strategic Importance on the Global Stage
This agreement represents a pivotal strategic shift for both nations.
For India, the deal signals a readiness to engage in high-standard economic agreements after its decision to stay out of RCEP in 2019. By deepening ties with the UK and EU, India strengthens its economic resilience against unpredictable regional trade dynamics.
For the UK, it underscores its post-Brexit global trade strategy, as this is only the third comprehensive trade agreement it has signed since leaving the EU.
For the USA and other global players, the India-UK FTA highlights the rise of a powerful India-UK axis that could influence global supply chains, particularly in pharmaceuticals, technology, and green energy.
Projected Economic Impact
The numbers paint a compelling picture of the deal’s potential:
- UK exports to India are projected to grow by nearly 60%, adding £15.7 billion by 2040.
- Overall bilateral trade is expected to increase by 39%, adding £25.5 billion annually compared to trade levels without the agreement.
- Indian exports across key sectors including agriculture, processed food, textiles, footwear, seafood, and jewellery, will enjoy expanded market access in the UK.
FAQs on the India UK Trade Deal
Q1. What is the India-UK Free Trade Agreement 2025?
It is a landmark pact signed on 24 July 2025, eliminating tariffs on 99% of Indian exports to the UK and reducing 90% of UK tariff lines in India. The deal also expands services trade and facilitates labour mobility.
Q2. Which Indian sectors will gain the most from the deal?
Textiles, agriculture, marine products, pharmaceuticals, engineering goods, gems and jewellery, leather, and plastics are among the largest beneficiaries.
Q3. How does the deal support Indian professionals?
About 75,000 Indian workers will avoid double social security contributions under the Double Contribution Convention, while professionals can work in 35 UK sectors for two years.
Q4. Which states in India stand to benefit the most?
Maharashtra, Gujarat, Tamil Nadu, Kerala, West Bengal, Punjab, and Uttar Pradesh are expected to see the biggest boosts to exports.
Q5. What are the strategic goals behind the FTA?
For India, the FTA aligns with its vision of becoming a global trade hub and diversifying beyond Asia. For the UK, it strengthens its trade portfolio post-Brexit.
Q6. When will the deal come into effect?
The agreement came into force following the official signing on 24 July 2025, with phased implementation over the next decade for certain tariff reductions.
Q7. Will the deal make British whisky and cars cheaper in India?
Yes. With reduced duties on whisky, cars, and engineering goods, British exports will become more competitive in the Indian market.
Conclusion
The India UK trade deal 2025 is more than just a bilateral agreement, it is a vision for the future. By slashing tariffs, boosting exports, and opening pathways for professionals, it lays the foundation for a partnership rooted in mutual growth and shared values.
For India, it represents an opportunity to integrate more deeply into global supply chains, expand its export portfolio, and strengthen its service sector. For the UK, it signals a confident step forward in its post-Brexit strategy. And for global audiences, particularly in the USA, the deal demonstrates how India and the UK are carving a new place in the international economic order.
The coming years will be the true test, but one thing is clear: the India-U.K. Free Trade Agreement is a game-changer that could redefine trade and economic cooperation for decades to come.
