India and the United Kingdom have reached a significant milestone in their bilateral relations by signing a landmark free trade agreement, marking the conclusion of over three years of detailed negotiations. The agreement, formalized in New Delhi by Indian Commerce Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds, was witnessed by Prime Ministers Narendra Modi and Keir Starmer. This Comprehensive Economic and Trade Agreement (CETA) represents the most ambitious free trade agreement the UK has forged in the Indo-Pacific region since its exit from the European Union.
The primary objective of this agreement is to double bilateral trade to $120 billion by the year 2030. This ambitious goal will be achieved through the elimination or reduction of tariffs on a broad spectrum of goods and services exchanged between the two nations. Specifically, the deal abolishes tariffs on 99% of Indian exports sent to the UK, granting zero-duty access for key products such as textiles, footwear, carpets, jewels, automobiles, and marine goods. Consequently, in exchange, India will lower duties on select premium British exports, including Scotch whisky, luxury cars, medical devices, and aerospace components.
Prime Minister Modi emphasized the agreement’s significance, referring to it as a milestone that would bring new opportunities for various demographics, including Indian youth, farmers, micro, small, and medium enterprises (MSMEs), and exporters. He stated that this agreement would also make high-quality British products more affordable and accessible to the Indian market. In conjunction with the FTA, Modi and Starmer introduced the ‘Vision 2035’ programme aimed at enhancing cooperation in areas such as technology, defense, climate change, and education.
The comprehensive agreement is structured across 27 distinct chapters encompassing various themes—trade in goods and services, intellectual property, digital commerce, innovation, government procurement, and anti-corruption measures. Although it currently excludes the contentious Carbon Border Adjustment Mechanism, both countries have agreed to revisit the matter during future negotiations.
The next step in the process is the ratification of the agreement by the UK Parliament, an endeavor expected to take up to six months. Once ratified, this FTA will stand as India’s first major bilateral trade deal with a developed Western economy, anticipated to spur investment, create jobs, and foster innovation across multiple sectors.
In addition to the free trade agreement, India and the UK have finalized a social security framework, known as the Double Contribution Convention. This agreement will benefit Indian professionals on short-term assignments in the UK by allowing them to avoid dual social security contributions, thereby facilitating cross-border employment.
Business leaders have warmly welcomed this transformative agreement. Anish Shah, the CEO of Mahindra Group, described it as a blueprint for modern and values-driven economic collaboration. Meanwhile, Sudhir Sekhri, Chairman of the Apparel Export Promotion Council, highlighted that the agreement opens up a new era in garment trade with the UK, a country known for being one of the world’s largest importers in this sector.
Negotiations for this extensive agreement commenced in January 2022 but encountered delays due to political uncertainties in the UK, notably the resignation of former Prime Minister Liz Truss. Following a resumption of talks in early 2024, the discussions were successfully concluded in May 2025, culminating in the formal signing of the agreement on July 24.
Given that trade between India and the UK already reached $21.34 billion in the fiscal year 2023-24, the new FTA is poised to serve as a powerful catalyst for future economic growth, bolstering investments and strategic alignment between the two nations. The deal heralds a promising era in India-UK relations, with broader implications for both countries in the global economic landscape.
