UK and India ink significant Free Trade Accord; PM Modi deems it a momentous day for bilateral ties
India-UK Free Trade Agreement: A Boost for Bilateral Trade and Market Access
In a historic move, India and the United Kingdom have signed the Comprehensive Economic and Trade Agreement (CETA) in 2025, opening significant opportunities across key sectors for both countries. The agreement, which took place in London at Prime Minister Keir Starmer's official residence, is aimed at boosting bilateral trade and providing better market access to businesses in both nations.
Key sectors benefiting India:
The CETA offers extensive tariff reductions and strategic benefits to labour-intensive manufacturing sectors such as marine products, textiles, chemicals, base metals, and processed foods. Tariff cuts or duty-free access for these sectors will aid export growth, particularly in labour-intensive sectors like textiles, leather, marine products, gems and jewelry, toys, and sports goods, unlocking significant export opportunities.
Agriculture also stands to benefit, with over 95% of tariff lines on agricultural and processed food products such as fruits, vegetables, pulses, spices, pickles, jackfruit, millets, and organic herbs becoming duty-free. This could boost India’s agri-exports by 20% in three years, supporting the $100 billion export target by 2030. Sensitive items like dairy and edible oils are protected.
India gains zero tariffs on key seafood exports (shrimp, tuna, fishmeal), unlocking a £5.4 billion UK market. This will boost coastal economies in states like Andhra Pradesh, Odisha, Kerala, and Tamil Nadu.
In the services sector, easier mobility for Indian professionals including contractual service suppliers and independent specialists (yoga instructors, classical musicians, chefs) enhances trade in services.
Key sectors benefiting the UK:
The CETA reduces UK tariffs on Indian imports, boosting UK exports of cars, cosmetics, soft drinks, medical devices, and aerospace products. Tariffs on aerospace drop to zero, potentially growing UK beverage exports by 180% (around £700 million increase). Indian tariffs on UK vehicles will sharply decrease from 110% to 10% (within quotas), potentially increasing UK motor vehicle exports by 310%, adding about £890 million in trade value.
Significant export growth in machinery, pumps, engines, cosmetics, and pharmaceuticals is expected as tariffs fall across these sectors. UK imports from India in textiles, apparel, and leather sectors are likely to rise substantially, reflecting increased market integration.
Broader benefits include:
Regulatory cooperation, streamlined certification, and reduced technical barriers to trade improve export efficiency for both parties. Facilitating the movement of Indian professionals to the UK fosters services trade growth. The agreement also enhances cross-border investment opportunities and cooperation in digital trade and government procurement.
Overall, the India-UK CETA establishes a comprehensive framework that substantially reduces tariffs while fostering cooperation in goods, services, and professional mobility, supporting India's export ambitions and providing the UK with expanded access to a fast-growing consumer market. The agreement is expected to create thousands of jobs for Britons and benefit India's youth, farmers, fishermen, and MSME sector. The FTA aligns with India's ongoing domestic reforms and efforts to modernize regulatory frameworks.
Prime Minister Narendra Modi hailed the day as historic in the bilateral relations between India and the UK, stating that the agreement will give new momentum and energy to the comprehensive strategic partnership between India and the UK, and discussed Vision 2035, a roadmap for the next decade in technology, defense, climate, education, and people-to-people connections. Hours before signing the FTA, Prime Minister Starmer defended the trade agreement, saying it will create jobs and unlock new opportunities for businesses. Prime Minister Modi and Prime Minister Starmer signed the Free Trade Agreement (FTA) during the meeting.
- The India-UK Free Trade Agreement, signed in 2025, offers substantial benefits across key sectors for both nations, aiming to boost bilateral trade.
- In India, labor-intensive sectors like textiles, marine products, and sports goods will see tariff cuts, kick-starting significant export opportunities.
- Over 95% of tariff lines on agricultural and processed food products are now duty-free, potentially boosting India’s agri-exports by 20% in three years.
- The UK will export more cars, cosmetics, and aerospace products to India, with aerospace tariffs dropping to zero and potentially increasing UK beverage exports by 180%.
- The CETA encourages regulatory cooperation, improved certification processes, and reduced technical barriers to trade.
- The agreement also enhances cross-border investment opportunities and cooperation in digital trade, as well as government procurement.
- In political news, Prime Minister Narendra Modi and Prime Minister Keir Starmer signed the Free Trade Agreement (FTA) during a meeting, discussing a roadmap for the next decade in technology, defense, climate, education, and people-to-people connections.
- Both leaders see the agreement as a pivotal step for job creation, benefiting India’s youth, farmers, fishermen, and MSME sector, along with providing expanded access to the UK's fast-growing consumer market.
