Charles King's Conversation with Modi After Landmark India-UK Trade Agreement
In a historic move, the India-UK Free Trade Agreement (FTA) was signed on July 24, 2025, by Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer at Starmer's country residence, Chequers. This comprehensive trade deal aims to significantly deepen economic ties between the two countries, with the goal of increasing bilateral trade to US$120 billion by 2030.
The FTA, hailed as a landmark pact post-Brexit, offers mutual growth opportunities consistent with the evolving global economic landscape. It promises to stimulate significant economic growth and job creation in both economies by reducing tariffs and trade barriers, making goods and services trade more efficient and predictable.
Key benefits of the FTA include substantial tariff reductions on Indian imports from the UK. The average tariff for these imports will lower from 15% to 3%. This improvement in market access will benefit UK exporters, particularly in sectors such as cars, cosmetics, soft drinks, medical devices, and whisky. Whisky tariffs will drop from 150% to 75% immediately and then to 40% over the next decade, greatly benefiting UK producers.
The FTA also removes tariffs on aerospace products (up to 11% previously), substantially reduces automotive tariffs (from as high as 110% to 10% under a quota system), and eliminates or halves tariffs on electrical machinery, aligning with the UK’s industrial strategy.
Mobility visas for Indian workers were a key negotiation topic, with most issues resolved by April 2025 to facilitate labor movement between countries.
The FTA is estimated to increase the UK’s GDP by 0.13% (£4.8 billion) and India’s GDP by 0.06% (£5.1 billion) annually in the long run. UK exports to India could grow by nearly 60%, adding £15.7 billion (US$21.3 billion) by 2040, with bilateral trade increasing by 39%, or £25.5 billion (US$34.5 billion), compared to projections without the deal.
The agreement provides substantial access for MSMEs and exporters. However, some UK sectors argue the deal misses deeper access provisions, notably legal and financial services.
The India-UK FTA covers around 99% of tariff lines for Indian exports. It opens public procurement markets, digital trade, intellectual property rights, and service sector collaboration for India. The agreement also covers diplomatic and cultural underpinnings, including renewed post-colonial relations and engagement with the Indian diaspora.
Following the signing ceremony, PM Modi paid a courtesy visit to King Charles III at Sandringham House in Norfolk. Modi lauded the deal as a "blueprint for our shared prosperity," stressing the historic and cultural bonds between the two nations.
The success of the India-UK trade deal will hinge on effective implementation, public accountability, and balancing economic growth with social and environmental accountability. The agreement awaits ratification by the UK Parliament.
Addressing the press, Starmer described the trade deal as the "most significant since Brexit," projecting it will generate £4.8 billion annually in economic gains and attract £6 billion in investment. The India-UK Free Trade Agreement represents a significant step towards deeper economic integration and a promising future for both nations.
- The India-UK Free Trade Agreement (FTA), a significant step towards deeper economic integration, was signed on July 24, 2025, with the goal of increasing bilateral trade to US$120 billion by 2030.
- The FTA offers mutual growth opportunities and promises to stimulate significant economic growth and job creation by reducing tariffs and trade barriers.
- Key benefits of the FTA include substantial tariff reductions on Indian imports from the UK, with the average tariff for these imports lowering from 15% to 3%.
- The agreement covers around 99% of tariff lines for Indian exports, opening public procurement markets, digital trade, intellectual property rights, and service sector collaboration for India.
- The FTA also covers diplomatic and cultural underpinnings, including renewed post-colonial relations and engagement with the Indian diaspora.
- The success of the India-UK trade deal will hinge on effective implementation, public accountability, and balancing economic growth with social and environmental accountability, with the agreement awaiting ratification by the UK Parliament.
