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On July 24, 2025, India and the United Kingdom sealed a historic free trade agreement (FTA) that promises to reshape their economic ties. Signed during Prime Minister Narendra Modi’s visit to the UK, with UK Prime Minister Keir Starmer in attendance, the deal sets an ambitious goal of doubling bilateral trade to $120 billion by 2030. This landmark pact, formally executed by India’s Commerce Minister Piyush Goyal and UK’s Jonathan Reynolds, brings sweeping tariff reductions and opens new markets for both nations.
The agreement, which still needs approval from the British Parliament, is expected to roll out within a year. It covers a wide range of sectors, from automobiles to clean energy, and is poised to create jobs, lower consumer costs, and drive economic growth.
Massive Tariff Cuts for Automobiles and Aerospace
One of the biggest wins is in the automotive sector, where tariffs on vehicles will plummet from as high as 110% to just 10% within quota limits. This reduction is a game-changer for UK carmakers looking to tap into India’s massive market, while Indian consumers can expect more affordable imported vehicles.
The aerospace industry also scores big, with tariffs dropping from 11% to zero. Major players like Airbus and Rolls-Royce are set to benefit, with contracts worth £5 billion already inked. These deals will see Airbus delivering aircraft to Indian airlines, many powered by Rolls-Royce engines, supporting hundreds of jobs in the UK.
Clean Energy and Tech Get a Boost
India’s push for renewable energy gets a shot in the arm as the FTA opens its procurement market to UK clean energy firms. This aligns with India’s growing energy demands and its shift toward sustainability. Meanwhile, the tech sector sees significant investment, with companies like Zerowatt Energy and DCube AI committing £15 million combined to establish operations in the UK, creating 100 jobs across cities like Leicester, Manchester, and London.
Highlights of the India-UK FTA
- Trade Target: Aims to double bilateral trade to $120 billion by 2030.
- Automotive Tariffs: Duties slashed from up to 110% to 10% within quota limits.
- Aerospace Benefits: Tariffs reduced from 11% to 0%, with £5 billion in contracts for Airbus and Rolls-Royce.
- Clean Energy Access: Opens India’s procurement market for UK clean energy firms.
- Tech Investments: £15 million from Zerowatt Energy and DCube AI.
- Consumer Goods: UK whisky and gin duties cut from 150% to 75%, with further reductions to 40% planned.
- Indian Exports: 99% of Indian exports, including textiles and gems, gain duty-free UK market access.
- Financial Services: UK firms get guaranteed access to India’s economy with equal treatment in insurance.
- Trade Growth: India’s exports to UK up 12.6% to $14.5 billion; total trade hit $21.34 billion in 2023-24.
- Implementation: Requires British Parliament approval, expected within a year.
Consumer Goods and Financial Services
The deal also slashes tariffs on UK consumer goods entering India. Whisky and gin duties will halve from 150% to 75%, with further cuts to 40% planned over the next decade. Other products like cosmetics, medical equipment, and even chocolate will become more affordable for Indian consumers. On the flip side, 99% of Indian exports, including textiles, leather, and gems, will enjoy duty-free access to the UK market.
British financial firms gain guaranteed access to India’s expanding economy, with provisions ensuring equal treatment in the insurance sector. This opens doors for UK companies to compete on a level playing field in one of the world’s fastest-growing markets.
A Growing Economic Partnership
The India-UK trade relationship is already on an upward trajectory. In 2024-25, India’s exports to the UK rose 12.6% to $14.5 billion, while imports grew 2.3% to $8.6 billion. Total trade reached $21.34 billion in 2023-24, up from $20.36 billion the previous year. The FTA aims to turbocharge these numbers, with comprehensive provisions covering goods, services, innovation, and intellectual property.
Commerce Minister Goyal hailed the agreement on X, congratulating both nations’ leaders and citizens on this milestone. The deal not only strengthens economic ties but also fosters innovation and job creation on both sides.
