The United Kingdom and India formally signed a landmark free trade agreement on July 24 during Indian Prime Minister Narendra Modi’s visit to Britain, marking a pivotal moment in their economic and strategic partnership.
The two countries announced almost 6 billion pounds ($8.1 million) in trade and investment deals in areas including AI, aerospace and dairy products, and pledged to work more closely together in sectors such as defense, climate, health and migration.
The accord, described by both governments as “historic”, concludes over three years of protracted negotiations and is projected to boost bilateral trade by £25.5 billion ($34 billion) by 2040.
Prime Minister Keir Starmer hosted Prime Minister Modi at the Chequers estate in Buckinghamshire for a high-level summit and signing ceremony, where they also announced a renewed Comprehensive and Strategic Partnership encompassing defense, technology, climate cooperation, and organized crime prevention.
Average tariffs on UK goods slashed from 15% to 3%
The agreement, the UK’s most economically significant trade pact since leaving the European Union in 2020, is expected to deliver a £4.8 billion annual uplift to the UK economy. Average tariffs on UK goods exported to India will be slashed from 15% to 3%. Particularly notable are reductions in import taxes on Scotch whisky from 150% to 75% immediately, and eventually to 40% over ten years and automotive tariffs, which will drop from over 100% to 10% under a quota system.
Prime Minister Starmer stated: “Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change.”
Indian Prime Minister Narendra Modi emphasized the strategic and economic value of the deal: “This is a blueprint for our shared prosperity.”
The deal also commits to a new India-UK plan to tackle illegal migration.
£6 billion trade and investment
The FTA was accompanied by nearly £6 billion in new trade and investment deals between UK and Indian firms, expected to generate over 2,200 high-skilled jobs across sectors such as aerospace, AI, advanced manufacturing, and pharmaceuticals. Currently, around 16,000 UK companies are trading goods with Indian companies.
William Bain, Head of Trade Policy at British Chambers of Commerce (BCC), said: “The signing of this agreement is a clear signal of the UK’s continuing commitment to free and fair trade. It will open a new era for our businesses and boost investment between two of the world’s largest economies.”
Key deals include:
- Airbus and Rolls-Royce will begin delivering aircraft and engine contracts to Indian airlines as part of around £5 billion worth of contracts.
- Zerowatt Energy will invest £10 million in a global HQ in Leicester, creating 50 jobs.
- Carbon Clean has invested £7.6 million in a Global Innovation Centre in Mumbai and will unlock 250 jobs across London, Glasgow and Huddersfield as well as 100 jobs in Mumbai.
- DCube AI is investing £5 million in the UK, unlocking 50 jobs across Manchester and London.
- LTIMindtree is investing £1 million to expand UK operations and add 300 jobs.
- Occuity and Remidio partnership will lead to export value of £74.3 million to bring ophthalmic AI healthcare to India.
- Aurionpro is investing over £20M to launch its UK HQ, creating 150+ high-value jobs in multiple locations across UK.
Tufan Erginbilgic, CEO of Rolls-Royce, welcomed the agreement, saying “These agreements will benefit Rolls-Royce and our customers, paving the way for future aerospace growth in India.”
Nik Jhangiani, Interim CEO of Diageo, commented: “This agreement marks a great moment for both Scotch and Scotland, and we’ll be raising a glass of Johnnie Walker to all those who have worked so hard to get it secured.”
Political and Human Rights concerns
Despite the optimism, the agreement has drawn criticism from human rights advocates and environmental organizations. Concerns have been raised about the absence of binding provisions for labor rights, environmental standards, and public health protections.
Tom Wills, Director of the Trade Justice Movement, stated: “The deal fails to include binding protections for labor rights, environmental standards or public health.”
Downing Street confirmed that Prime Minister Starmer raised the detention of Jagtar Singh Johal, a UK national imprisoned in India since 2017, during the bilateral meeting. Johal alleges he was tortured and coerced into confessing to terrorism-related offenses, though he has been cleared in one of nine cases.
Strategic partnership Beyond Trade
The two nations also reaffirmed commitments on key global challenges and bilateral issues. A new framework was signed to tackle irregular migration, organized crime, and document fraud. A criminal records sharing agreement is under negotiation to enhance law enforcement cooperation and enable enforcement of travel bans.
Business and Trade Secretary Jonathan Reynolds noted: “The billions brought to our economy from the trade deal signed today will reach all regions and nations of the UK so working people in every community can feel the benefits.”
The partnership also enhances cooperation in critical sectors such as:
- Defense and Security: Closer collaboration in counterterrorism and maritime security.
- Technology and Innovation: Expansion of the UK-India Technology Security Initiative, covering AI, semiconductors, health tech, and quantum technologies.
- Climate and Energy: Increased access to India’s clean energy procurement market.
- Education and Healthcare: Joint projects in medical training, AI diagnostics, and R&D.
Ratification and Implementation
The agreement is pending ratification by both the UK and Indian parliaments, a process expected to conclude within a year. Once enacted, British exporters will benefit from simplified customs procedures and reduced regulatory barriers, particularly in high-growth markets.
Jean-Etienne Gourgues, CEO of Chivas Brothers, highlighted the long-term opportunity: “India is the world’s biggest whisky market by volume and greater access will be an eventual game changer for the export of our Scotch whisky brands.”
The UK-India FTA sets a precedent for future trade negotiations with other advanced economies and regions. For India, it provides a potential template for long-sought agreements with the European Union and others. For Britain, it is a critical step in reorienting trade policy post-Brexit and reinforcing geopolitical ties with the Indo-Pacific.
As Starmer concluded at Chequers: “This is not the extent or the limit of our collaboration with India… We want to strengthen our relationship further, so that it is even more ambitious, modern and focused on the long term.”