India and the United Kingdom signed a landmark Free Trade Agreement on Thursday during Prime Minister Narendra Modi’s visit to London. The deal, expected to increase annual trade between the two nations by around $34 billion, was signed by Commerce Minister Piyush Goyal and UK Business Secretary Jonathan Reynolds. It marks India’s most significant trade pact in more than ten years and is the UK’s first major trade agreement since exiting the European Union.
Leaders from both countries have hailed the agreement as a historic development in their economic partnership. Prime Minister Modi described the pact as a major step toward shared prosperity and future collaboration. The agreement is set to benefit a broad spectrum of stakeholders, including farmers, fishermen, small-scale industries, and skilled professionals. Indian exports such as textiles, leather, gems and jewellery, processed foods, seafood, and engineering goods will now have nearly duty-free access to the UK market.
On the other hand, British products like automobiles, medical devices, aerospace components, chocolates, whisky, and cosmetics will be subject to significantly reduced tariffs when entering the Indian market. Average import duties on these items will fall from 15% to approximately 3%.
Trade experts believe this deal will unlock new growth opportunities for both nations. Agneshwar Sen, Trade Policy Leader at EY India, described the agreement as a transformative step that will eliminate most trade barriers and encourage job creation in sectors that depend heavily on exports. He also pointed out that the pact has strong provisions for the services sector, including easier visa rules and a key social security exemption for short-term assignments, which will ease cost and compliance burdens.
The leather sector in India is expected to expand its share of the UK market by an additional 5% within two years. Exports of engineering goods and electronics could double by 2030, while chemical exports are predicted to grow by 40% in the next financial year. Software and IT services, already a strong point for India, are projected to see annual growth of 20% under the new deal.
Indian professionals stand to gain significantly from this agreement. It opens 35 different sectors in the UK where Indian talent can work for up to two years without the need to set up a local office. This will benefit freelance workers, including chefs, musicians, yoga trainers, and contract-based professionals. It’s estimated that more than 60,000 Indian IT workers annually—especially those from companies like Infosys, TCS, HCL, Tech Mahindra, and Wipro—could take advantage of these relaxed rules.
One major highlight of the pact is the exemption of Indian professionals from paying into the UK’s social security system for up to three years during short-term assignments. According to Puneet Gupta from EY India, this clause will reduce financial strain for both employers and employees and allow workers to maintain their social security contributions in India, making foreign postings more attractive and sustainable.
From the UK’s perspective, the benefits are also substantial. Over 90% of its exports to India will now be cheaper, and 85% of those will become fully duty-free within a decade. UK businesses will also be allowed to compete for Indian government contracts worth more than Rs 2,000 crore, gaining access to roughly 40,000 tenders each year. Officials believe this could generate over 2,000 new jobs and lead to a wage increase of around £2.2 billion.
The agreement includes dedicated sections on financial services and intellectual property rights. British companies will receive equal treatment to Indian firms in financial markets. Concerns about how the pact might affect India’s generic drug production were addressed, with assurances that access to affordable medicines will remain unchanged.
UK Prime Minister Keir Starmer called the agreement a major success for Britain, predicting that it will generate thousands of jobs and attract significant investment. As part of the broader cooperation, 26 UK-based firms will start new ventures in India, while Indian companies have pledged investments totaling nearly £6 billion in the UK.
