Britain Signs a Major Free Trade Agreement with India during Modi’s Trip

India and the United Kingdom have signed a landmark Free Trade Agreement (FTA), marking a significant step forward in strengthening their economic and strategic ties. The agreement was signed during Indian Prime Minister Narendra Modi’s official visit to Britain, where he met British Prime Minister Keir Starmer. The deal aims to significantly boost trade by lowering tariffs on a wide range of goods, including textiles, whisky, cars, and seafood, while also opening up markets for services and business cooperation.

The FTA, concluded after nearly three years of on-and-off negotiations, is expected to increase bilateral trade by £25.5 billion (around $34 billion) by 2040. It is the UK’s largest trade agreement since its departure from the European Union in 2020. For India, it represents a key partnership with an advanced economy that could serve as a model for future trade agreements with the EU and the United States.

Prime Minister Modi described the deal as “a blueprint for our shared prosperity,” pointing out how it will allow greater market access for Indian products such as jewelry, textiles, and seafood. Prime Minister Starmer, hosting Modi at his Chequers residence, called it a new era for global trade, emphasizing that the agreement would make trade “cheaper, quicker, and easier” for both sides.

Under the new trade pact, tariffs on Scotch whisky will immediately be reduced from 150% to 75%, and further drop to 40% over ten years. Import duties on cars will be cut to 10% within five years under a controlled quota system. In return, Indian manufacturers will gain access to the British market for electric and hybrid vehicles. Nearly 99% of Indian exports to Britain will benefit from zero duties, while the UK will see tariff reductions on 90% of its products, with average rates dropping from 15% to 3%.

In addition to goods, the deal covers services, clean energy projects, insurance, and public procurement. It will also ease movement for short-term business visitors and eliminate the need for workers on temporary assignments to pay social security in both countries. However, visas are not part of the agreement.

While the UK’s economic benefit from the deal is estimated at £4.8 billion a year by 2040—relatively small compared to its £2.6 trillion GDP—the agreement is seen as a major strategic achievement. Indian Commerce Minister Piyush Goyal noted that despite some issues still pending on the investment treaty, the successful completion of the FTA reflects India’s strong commitment to engaging with developed economies.

The agreement also includes cooperation on defence, climate change, and crime prevention, further strengthening the India-UK partnership.