NEW DELHI / LONDON – July 23, 2025:
India and the United Kingdom have officially signed a long-awaited free trade agreement during Prime Minister Narendra Modi’s visit to London, marking a historic milestone in India-UK economic relations.
The pact, concluded after over three years of stop-start negotiations, promises to boost bilateral trade, lower tariffs, and improve market access on both sides.
What’s in the India UK Free Trade Agreement?
Under this landmark deal:
- India will reduce tariffs on:
- Scotch whisky: Slashed from 150% to 75% immediately, and further down to 40% in 10 years
- British cars: Duties dropped from 100% to 10% under a quota system
- Select food items: Tariff relief on British gourmet exports
- UK will offer India:
- Duty-free access to 99% of Indian exports, including:
- Textiles
- Footwear
- Marine products
- Engineering goods
- Market access for Indian electric and hybrid vehicles, also under a quota system
- Duty-free access to 99% of Indian exports, including:
Why This Trade Deal Matters
The agreement comes as a mutual economic push between both nations to strengthen ties in the post-Brexit and post-COVID global landscape.
According to Indian Foreign Secretary Vikram Misri, the deal has undergone legal vetting and is expected to be implemented within a year after approvals from the UK Parliament and India’s federal cabinet.
“This is a significant agreement,” said Misri, emphasizing its role in reshaping trade flows between two of the world’s most dynamic economies.
Modi’s 4th UK Visit: A Strategic Step
PM Modi’s four-day tour includes:
- High-level talks with UK Prime Minister Keir Starmer
- Focused discussions on:
- Trade
- Energy cooperation
- Security
- Healthcare & education
- Meetings with top UK business leaders
This is Modi’s fourth visit to the UK since 2014, underscoring the growing importance of bilateral economic diplomacy.
Bilateral Trade Snapshot
- Bilateral trade value (2023-24): $55 billion
- UK is India’s 6th largest investor: $36 billion invested
- 1,000+ Indian companies in the UK employing over 100,000 people
- Indian investment in the UK: $20 billion+
Industry Reactions
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), welcomed the deal, calling it a game-changer.
“The UK is a crucial market for Indian exporters. This trade deal will significantly benefit sectors like textiles, footwear, marine, and engineering,” he said.
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What Happens Next?
The deal must now clear two more steps:
- Approval by the British Parliament
- Clearance from India’s Union Cabinet
Once approved, the trade deal is expected to transform India-UK relations from historical ties to a robust economic partnership fit for the future.
