UK and India finalise free trade agreement after three years of talks
The agreement between the world’s fifth and sixth largest economies aims to increase bilateral trade by £25.5 billion by 2040 through improved market access and eased trade restrictions.
Starmer and Modi shake hands during a bilateral meeting in the sidelines of the G20 summit at the Museum of Modern Art in Rio de Janeiro, Brazil Brazil, on November 18, 2024. (Photo: Getty Images)
Vivek Mishra works as an Assistant Editor with Eastern Eye and has over 13 years of experience in journalism. His areas of interest include politics, international affairs, current events, and sports. With a background in newsroom operations and editorial planning, he has reported and edited stories on major national and global developments.
INDIA and the United Kingdom on Tuesday concluded a long-awaited free trade agreement after three years of negotiations. The deal, finalised in the context of past US tariff actions under president Donald Trump, is the most significant trade pact for the UK since it left the European Union.
The agreement between the world’s fifth and sixth largest economies aims to increase bilateral trade by £25.5 billion by 2040 through improved market access and eased trade restrictions.
"These landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies," Indian prime minister Narendra Modi said.
Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our… — Narendra Modi (@narendramodi) May 6, 2025
The pact lowers tariffs on a range of goods including whisky, advanced manufacturing components, and food items such as lamb, salmon, chocolates, and biscuits. It also sets quotas for automobile imports on both sides.
Both countries are also working on separate bilateral agreements with the United States to remove some of the tariffs introduced during Trump’s presidency, which had disrupted global trade. The UK-India deal gained urgency amid these developments.
"We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy," prime minister Keir Starmer said.
"Strengthening our alliances and reducing trade barriers with economies around the world is part of our plan for change to deliver a stronger and more secure economy here at home."
The agreement opens up parts of India’s protected market, including the automobile sector, and is seen as a model for India’s approach to future trade discussions with the United States and the European Union.
Negotiations began in January 2022 and became symbolic of Britain’s post-Brexit trade ambitions. The talks faced several delays as the UK went through four prime ministers since then, and both countries held elections last year.
“The prime minister spoke to the prime minister of India Narendra Modi today.
“The leaders began by celebrating the landmark UK-India Free Trade Agreement announced today – a deal which will add billions to the UK economy, boost wages and deliver on this government’s Plan for Change.
Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our… — Narendra Modi (@narendramodi) May 6, 2025
“In a huge economic win for the UK, delivering for working people and British businesses, the prime minister underscored the need to go further and faster to get things done, to secure and renew our country.
“Through pragmatism and purpose, the leaders noted that this historic deal is the biggest the UK has done since leaving the EU, and the most ambitious India has ever done. Prime minister Modi also thanked the prime minister for his decisive leadership in getting the deal over the line.
“Turning to the terrorist attack in Jammu and Kashmir last month, the prime minister reiterated his deep condolences at the tragic and senseless loss of life.
“Finally, prime minister Modi extended an invitation to India, which the prime minister was pleased to accept and said he looked forward to visiting India at the earliest opportunity.
“They looked forward to speaking soon.”
Key elements of the UK-India trade deal:
Bilateral trade: Currently at £42.6 billion, expected to grow by £25.5 billion annually from 2040.
Market access: India to reduce import duties on whisky, medical devices, machinery, lamb, salmon, chocolate, soft drinks, biscuits, cosmetics, and aerospace products.
Whisky tariffs: Cut from 150 per cent to 75 per cent, then down to 40 per cent by the 10th year.
Automobiles: India to reduce tariffs to 10 per cent under a quota, from over 100 per cent.
Tariff impact: India's tariff cuts expected to exceed £400 million based on 2022 data, with the value expected to more than double in 10 years.
Trade ranking: India was the UK’s 11th largest trading partner in 2024.
Post-Brexit milestone: UK described the deal as its most economically significant trade agreement since leaving the EU.
NatWest also raised its key profit guidance for the year, saying it now expects to achieve a return on tangible equity of 16.5 per cent, up from its earlier guidance of up to 16 per cent.
NATWEST reported an 18 per cent rise in first-half profit on Friday, slightly ahead of expectations, as it recorded growth in both loans and deposits. The performance allowed the bank to announce a new share buyback worth £750 million.
The British lender posted an operating pretax profit of £3.6 billion for the January to June period. This compares with the £3.46bn average forecast from analysts compiled by the bank.
NatWest also raised its key profit guidance for the year, saying it now expects to achieve a return on tangible equity of 16.5 per cent, up from its earlier guidance of up to 16 per cent.
The results come a day after Lloyds also posted strong earnings, supported by continued resilience among UK households and businesses despite broader economic uncertainty.
The share buyback announcement was in line with analyst expectations of £730m. NatWest shares have climbed 47 per cent over the past year.
On 30 May, NatWest announced it had returned to full private ownership, marking the end of a taxpayer-funded government stake dating back to its 2008 financial crisis rescue.
Then known as RBS, the bank has shifted from being a global investment bank to a domestic-focused corporate and retail lender, which has helped shield it from broader market disruptions.
After years of reducing its operations, NatWest has started expanding again. In June last year, it acquired the banking arm of supermarket retailer Sainsbury’s as part of broader consolidation across the UK financial sector.
The Sainsbury’s deal contributed £2.2bn in customer balances in the second quarter, supporting NatWest’s overall loan growth of £8bn during the period.
The bank said its lending performance, along with relatively low impairments, has helped ease concerns about the impact of slow economic growth and persistent inflation on businesses and mortgage holders.
Competition is expected to increase further this year following Santander’s acquisition of TSB, which created a larger competitor to major players such as NatWest and Lloyds.
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Prime minister Keir Starmer and prime minister Narendra Modi of India walk on the ground at Chequers near Aylesbury, England, Thursday, July 24, 2025. Kin Cheung/Pool via REUTERS
THE India-UK free trade agreement signed on Thursday (24) has been hailed by Indian business and industry leaders as a “transformational milestone” for trade.
Following his talks with Starmer, Modi described the “historic” deal as the start of a new chapter in bilateral relations, which will greatly improve the ease and confidence of doing business between the two countries.
Sunil Bharti Mittal, founder and chairman of Bharti Enterprises and co-chair of the India-UK CEO Forum, who accompanied Modi as part of the Confederation of Indian Industry (CII) delegation, said businesses in both countries stand to “gain tremendously” from the agreement.
“Indian industry across all sectors welcomes the India-UK FTA with great optimism. This agreement establishes a modern, forward-looking partnership that will stimulate innovation, improve market access, and encourage investment,” said Mittal.
“Businesses in India and the UK will benefit greatly, as the deal lays the foundation for expanding cooperation across key growth sectors."
Once implemented after British parliamentary approval, the deal is expected to lower trade barriers, boost investor confidence, and encourage joint ventures and technology transfers, particularly in labour-intensive industries such as textiles and apparel, leather goods, gems and jewellery, and marine products.
The agreement also opens up new opportunities in clean energy, digital technology, life sciences and advanced manufacturing.
According to the CII, India’s rapidly growing market and manufacturing strengths combined with the UK’s expertise in innovation, finance, and high-end services will further accelerate economic ties.
Another significant benefit of the FTA is a reciprocal social security agreement, allowing Indian professionals in the UK to continue contributions in their home country for up to three years.
“CII has long advocated for a comprehensive and forward-looking India-UK free trade agreement. This FTA marks a defining moment, showing our shared commitment to inclusive growth, economic resilience, and industrial transformation,” said Chandrajit Banerjee, CII director general.
“It creates a strong foundation for deeper market access, regulatory cooperation, and next-generation partnerships between Indian and UK businesses,” Banerjee added.
Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), called the trade deal a “landmark accord” unlocking exciting opportunities for the gems and jewellery sector.
“Currently, exports to the UK are £750 million; with duty concessions, this is expected to rise to around £2 billion within three years, raising overall bilateral trade in this sector to an estimated £5.5bn,” said Bhansali.
From the UK side, Rolls-Royce Plc’s chief executive welcomed the “landmark” agreement in bilateral cooperation.
“Rolls-Royce is expanding its aerospace capabilities in India, and we look forward to working with partners there to co-develop power and propulsion technologies for India and beyond, building on 60 years of successful technology transfer. This will create jobs and foster technology and manufacturing growth,” said Tufan Erginbilgic.
Nik Jhangiani, interim chief executive of Diageo, welcomed the reduction of alcohol tariffs from 150 per cent to 75 per cent, with a further long-term reduction to 40 per cent.
“This agreement is a great moment for both Scotch whisky and Scotland. We’ll be raising a glass of Johnnie Walker to everyone who worked hard to achieve it,” said Jhangiani.
Jean-Etienne Gourgues, chairman and CEO of Chivas Brothers, added: “The signing of the UK-India FTA offers hope in challenging times for the spirits industry. India is the world’s largest whisky market by volume, and improved access will be a game changer for our brands like Chivas Regal and Ballantine’s.
“The deal will support long-term investment and jobs at our distilleries in Speyside and bottling plant at Kilmalid, helping growth in both Scotland and India over the next decade. We hope both governments will ratify the deal quickly so businesses can begin implementation.”
(PTI)
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Several companies within Anil Ambani’s group have entered bankruptcy proceedings since 2017.
INDIA's financial crime agency has searched 35 locations linked to the Reliance Anil Ambani Group as part of an investigation into alleged money laundering and diversion of public funds, a government source told Reuters on Thursday.
According to the source, the Enforcement Directorate (ED) alleges the group was involved in a “well-planned” scheme to divert bank loans worth 30 billion rupees (around £256 million) from YES Bank to various shell companies between 2017 and 2019. The source requested anonymity as he is not authorised to speak to the media.
Entities under Anil Ambani’s Reliance Group are also accused of paying bribes to YES Bank officials before the loans were sanctioned. The source said the approvals violated internal processes at the bank.
Several companies within Anil Ambani’s group, the younger brother of Mukesh Ambani, have entered bankruptcy proceedings since 2017.
YES Bank, which had extended significant loans to the group, was declared insolvent in 2020. It was later rescued under a plan backed by Indian lenders and approved by the central bank. Japan’s Sumitomo Mitsui Banking Corp is looking to acquire a 20 per cent stake, pending regulatory clearance.
The investigation also found serious lapses in YES Bank’s loan disbursement process, including lending to financially weak companies, backdating of credit memos, evergreening of loans to avoid classifying them as nonperforming, and misrepresentation of financials.
Rana Kapoor, the former promoter of YES Bank, was charged with bank fraud by the ED in 2020 and arrested. He pleaded not guilty and was granted bail in 2024 by a special court in Mumbai, according to Indian media reports.
Anil Ambani’s group companies have faced multiple regulatory actions in recent years. In August 2024, SEBI barred Anil Ambani and 24 others from the securities markets for five years, citing diversion of funds from Reliance Home Finance.
Shares of Reliance Infrastructure and Reliance Power fell by up to 5 per cent on Thursday following news of the ED probe.
(With inputs from Reuters)
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The deal was formalised during Indian prime minister Narendra Modi’s brief visit to the UK, where he held talks with his British counterpart Keir Starmer. (Photo: Getty Images)
INDIA and the United Kingdom signed a landmark Free Trade Agreement (FTA) on Thursday during Indian prime minister Narendra Modi’s brief visit to the UK. The deal, finalised after three years of negotiations, aims to boost annual bilateral trade by around £25.5 billion.
The agreement was signed by India’s commerce minister Piyush Goyal and the UK’s secretary of state for business and trade Jonathan Reynolds following formal talks between Modi and prime minister Keir Starmer at Chequers, northwest of London.
Modi arrived in London at around 8.30 pm on Wednesday and is scheduled to leave later on Thursday, spending less than 24 hours in the country.
After the signing, Modi was expected to have lunch with Starmer and meet King Charles at Sandringham.
getty images
Deal details and economic impact
The agreement will reduce tariffs on a wide range of goods and services. India will lower tariffs on nearly 90 per cent of UK goods. Scotch whisky tariffs will fall from 150 per cent to 75 per cent immediately and reduce to 40 per cent over the next decade. Tariffs on cars will drop from over 100 per cent to 10 per cent under a quota system. The UK will also cut tariffs on cosmetics, medical devices, salmon, chocolates, biscuits, clothes, footwear, and food products such as frozen prawns.
The UK will offer duty-free access to 99 per cent of Indian goods. Indian exports including textiles, footwear, gems and jewellery, auto components, chemicals, furniture and machinery will benefit. Average tariffs UK firms face in India will fall to 3 per cent from 15 per cent.
According to the UK government, the agreement is expected to increase UK GDP by £4.8 billion annually in the long term. The UK and India are the sixth and fifth largest global economies, respectively, with current bilateral trade worth around £41 billion. The deal is the UK’s most economically significant bilateral trade agreement since leaving the European Union.
Standing alongside Modi, Starmer said, “This is not the extent or the limit of our collaboration with India. We have unique bonds of history, of family and of culture and we want to strengthen our relationship further, so that it is even more ambitious, modern and focused on the long term.”
He described the agreement as a “landmark moment” and said it would bring “huge benefits” for both countries, making trade “cheaper, quicker and easier.”
Modi called the deal a “blueprint for our shared prosperity” and said the visit would “go a long way in advancing the economic partnership between our nations.”
The FTA includes provisions for temporary business visitors, contractual service providers, yoga instructors, chefs, and musicians, though visa arrangements are not covered.
Indian workers and their employers on temporary postings in the UK will be exempt from paying social security contributions, with estimated annual savings of around £342 million.
Modi and Starmer meet children playing cricket at Chequers.
UK businesses will gain access to India’s non-sensitive government procurement market, which includes about 40,000 tenders worth around £38 billion annually.
The agreement also covers services such as insurance and includes provisions for British firms to participate in Indian projects in areas like clean energy.
Modi and Starmer having tea at Chequers.
India did not receive an exemption from the UK’s Carbon Border Adjustment Mechanism (CBAM), which will come into effect in 2027. Talks on a separate bilateral investment treaty are still ongoing.
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The company said the move comes during its 50th anniversary year and is intended to help retailers manage cost pressures and improve margins.
BESTWAY WHOLESALE has announced a £10 million investment to reduce prices on more than 2,000 core lines.
The price cuts, which are not part of any promotion, will take immediate effect and are aimed at supporting independent retailers across the UK.
The company said the move comes during its 50th anniversary year and is intended to help retailers manage cost pressures and improve margins.
Dawood Pervez, managing director at Bestway Wholesale, said: “We know our customers are under pressure – and we’re taking decisive, long-term action. This isn’t a one-off deal. It’s a real investment in the day-to-day success of the independent retail sector. By lowering our core prices, we’re helping retailers strengthen their margins and stay competitive where it really matters.”
The £10 million investment will cover all categories, focusing on everyday essentials. Bestway said the changes will be communicated through depot signage, digital platforms, newsletters, and leaflets.
Pervez added: “At Bestway, our success is built on our customers’ success. This investment shows we’re listening… we’re acting … and we’re standing shoulder to shoulder with independents across the country.”