In a major boost to their bilateral ties, India and the United Kingdom on Tuesday finalised a landmark Free Trade Agreement (FTA) and a long-awaited social security pact, following over three years of protracted negotiations. The deals were sealed during a high-level conversation between Prime Minister Narendra Modi and British Prime Minister Keir Starmer.
“Delighted to speak with my friend PM Keir Starmer,” Modi posted on social media platform X. “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. I look forward to welcoming PM Starmer to India soon,” he added.
The FTA is expected to significantly enhance trade relations by reducing tariffs, expanding market access, and simplifying trade procedures. The social security agreement — a long-standing demand from the Indian side — aims to safeguard the interests of skilled professionals working across borders by eliminating the need for double contributions to social security schemes.
However, a separate Bilateral Investment Treaty (BIT), which has faced hurdles over dispute resolution provisions, remains unresolved. Despite progress on the trade and social security fronts, both countries continue to struggle with divergent views on the investment protection framework.
The urgency to conclude the FTA is underscored by global shifts in trade dynamics, including rising protectionist policies, particularly from the United States. The India-UK agreement signals a broader trend of countries turning to bilateral arrangements amid uncertain multilateral negotiations.
Negotiations on the FTA and the two related pacts — the social security agreement and BIT — were relaunched in February after a year-long pause. The final breakthrough came following Commerce and Industry Minister Piyush Goyal’s recent visit to London, where he met British Trade Secretary Jonathan Reynolds to resolve outstanding issues and drive the deal forward.
While the full text of the agreements has not yet been released, the conclusion of the FTA also comes at a time when India and the United States are accelerating talks for an initial trade deal.
Bilateral trade between India and the UK stood at $21.33 billion in the 2024–25 financial year. India’s exports to the UK rose by 13.3 per cent to $12.9 billion, while imports declined by 6.1 per cent to $8.4 billion. In British currency terms, total trade is valued at approximately £17.1 billion, with Indian exports at £10.4 billion and imports at £6.8 billion.
The UK–India FTA will make it easier for British businesses to export key products such as whisky, cars, aerospace components, and food items to India, while also reducing duties on Indian exports like clothing, footwear, and certain foodstuffs. Notably, the deal does not include any changes to immigration policy, including provisions for Indian students in the UK, according to the British government.
Once implemented — which could take up to a year — UK consumers are expected to benefit from lower prices on a range of Indian imports, including frozen prawns, clothing, and footwear. Tariffs on British gin and whisky will be halved to 75%, with further reductions to follow. Import taxes on cars, aerospace equipment, electricals, and certain UK food products will also be brought down to 10%.
