India and UK Conclude Historic Free Trade Agreement After Prolonged Negotiations
India and the United Kingdom have forged a groundbreaking free trade agreement, marking the culmination of over three years of rigorous negotiations and promising a substantial boost to their economic ties. The agreement was signed in New Delhi by Indian Commerce Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds, in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer.
The Comprehensive Economic and Trade Agreement (CETA) represents the most ambitious free trade agreement the UK has entered into in the Indo-Pacific region since Brexit. The agreement is designed to double bilateral trade to $120 billion by 2030, primarily by eliminating or reducing tariffs across a diverse range of goods and services.
The accord removes tariffs on 99% of Indian exports to the UK, granting zero-duty access for products like textiles, footwear, carpets, gems and jewellery, automobiles, and marine goods. Conversely, India will lower duties on high-end British exports such as Scotch whisky, luxury cars, medical devices, and aerospace components.
Prime Minister Modi hailed the agreement as a significant milestone in India-UK relations. He emphasized that it would open new avenues for Indian youth, farmers, MSMEs, and exporters, while also making quality British products more affordable and accessible in India. Modi and Starmer also unveiled plans for a 'Vision 2035' initiative aimed at enhancing cooperation in technology, defense, climate, and education.
The agreement encompasses 27 chapters, addressing trade in goods and services, intellectual property, digital trade, innovation, government procurement, and anti-corruption measures. The contentious Carbon Border Adjustment Mechanism is not included in the current agreement, although both countries have agreed to revisit this issue in future discussions.
The free trade agreement awaits ratification by the UK Parliament, a process anticipated to take up to six months. Once implemented, it will be India's first substantial bilateral trade agreement with a developed Western nation and is expected to stimulate investment, employment, and innovation across various sectors.
Additionally, India and the UK have finalized a social security agreement known as the Double Contribution Convention. This agreement will allow Indian professionals on short-term assignments in the UK to avoid paying dual social security contributions, thus facilitating cross-border employment.
The business community has responded positively to the agreement, viewing it as a transformative step. Mahindra Group CEO Anish Shah described it as a model for modern, values-driven economic collaboration. Sudhir Sekhri, Chairman of the Apparel Export Promotion Council, remarked that it would usher in a new era for garment trade with the UK, which ranks among the world's largest importers in this sector.
Negotiations began in January 2022 but were delayed by political changes in the UK, including the resignation of former Prime Minister Liz Truss. Talks resumed in early 2024 and were successfully concluded in May 2025, leading to the formal signing of the agreement on July 24.
With trade already amounting to $21.34 billion in 2023-24, the India-UK free trade agreement is poised to serve as a powerful catalyst for future growth, investment, and strategic alignment between the two nations.
