Introduction
On 6 May 2025, India and the UK finalized a landmark Free Trade Agreement (FTA). Government of India has described this as “a historic and ambitious deal to boost jobs, exports, and national growth.” The FTA includes tariff elimination on 99% of Indian tariff lines, covering nearly 100% of trade value, and reduces tariffs on 90% of UK tariff lines, with an estimated annual economic boost of £4.8 billion (US$6.4 billion) for the UK by 2040.
Why this deal was made?
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To increase trade, investment, innovation and job creation in both the economies
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To open new opportunities for businesses, strengthen economic linkages, and deepen people-to-people ties.
Benefits of the Deal
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Nearly 99% of Indian exports will now face zero duty in the UK
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The UK-India Free Trade Agreement includes tariff elimination on 99% of Indian and reduced duties on 90% of UK tariff lines
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Whisky and gin will be taxed less — first down to 75%, initially and then to 40% over the next decade.
Sector-wise benefits
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Big chances in textiles, footwear, marine products, engineering goods, gems and jewellery, lather, and even toys.
For the UK:
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This ambitious and comprehensive deal is expected to increase UK GDP (gross domestic product) by £4.8 billion and UK wages by £2.2 billion each and every year in the long run. Bilateral trade is also expected to increase by £25.5 billion each and every year in the long run.
Services & Professional Mobility
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Indian workers temporary in UK and their employers are now exempt from paying into UK’s social security for 3 years, which is a big relief.
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The agreement eases mobility for professionals, including contractual service suppliers, business visitors, investors, intra-corporate transferees, and independent professionals like yoga instructors, musicians, and chefs, offering “greater global mobility for aspirational young Indians”. This was a key demand from India..
Economic growth and jobs:
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Bilateral trade, valued at US$60 billion in 2024, is projected to double to US$100 billion by 2030, boosting national growth for both economies.
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Commitments on digitally delivered services and streamlined customs processes enhance trade efficiency for both nations.
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Small businesses, manufacturers, and service providers in India could do better because of this deal.
Concerns:
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Some Indian alcohol companies are upset. They feel the UK got more benefits (especially for whisky), and India didn’t get enough in return in the same area.
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We’ll have to wait and see if this deal stays fair for both sides over time.
Conclusion:
The conclusion of a balanced, equitable and ambitious FTA, covering trade in goods and services, is expected to significantly enhance bilateral trade, generate new avenues for employment, raise living standards, and improve the overall well-being of citizens in both countries.
It will also unlock new potential for the two nations to jointly develop products and services for global markets. This agreement cements the strong foundations of the India-UK Comprehensive Strategic Partnership, and paves the way for a new era of collaboration and prosperity.