The India UK trade deal 2025, officially known as the India–UK Free Trade Agreement (FTA), is a groundbreaking pact signed on July 24, 2025, during Prime Minister Narendra Modi’s visit to London. After over three years of negotiations and 15 formal rounds, the agreement signifies a new chapter in the two countries’ economic relationship. It aims to boost bilateral trade, slash tariffs, encourage investments, and enhance mobility for skilled professionals. As the first full FTA between India and a European nation, it also marks a shift in India’s broader trade policy.
Timeline & Background
- Start of Negotiations: January 2022
- 15 Rounds of Talks: Culminated in an agreement in principle in May 2025
- Signing Date: July 24, 2025
- Leaders Present: Indian PM Narendra Modi & UK PM Keir Starmer
- Objective: Enhance bilateral trade, investment, services, and mobility
The deal aligns with India’s evolving trade strategy and serves as a blueprint for future agreements with developed economies like the EU and USA.
Key Tariff Cuts
The FTA brings significant tariff reductions on both sides:
Tariff Cuts by India:
- Whisky & Gin: Import duty slashed from 150% to 75% immediately; to fall to 40% over 10 years
- Automobiles (EVs & Luxury): Duties to be reduced from 100–125% to 10% under a quota system over 5 years
- Other Goods: Tariff cuts on salmon, chocolates, biscuits, medical devices, and cosmetics
Tariff Cuts by the UK:
- 99% of Indian exports to the UK to enjoy zero-duty access, including:
- Textiles and apparel
- Footwear
- Gems and jewellery
- Engineering goods
- Furniture
- Pharma and chemicals
This is a major win for India’s MSME exporters and labour-intensive sectors.
Services & Mobility Provisions
One of the most impactful aspects of the deal is the liberalisation of services and temporary movement of professionals.
- Skilled Professionals: Easier visa access for Indian chefs, IT workers, yoga instructors, and consultants
- Work Visas: New pathways created for Indian professionals to work in the UK under time-bound conditions
- Social Security: Indian workers posted in the UK (and vice versa) for up to 3 years are exempt from double social security payments (like UK National Insurance contributions)
This makes overseas assignments more attractive for Indian professionals and businesses alike.
Investment & Procurement Access
The deal creates new investment opportunities and greater market access:
- UK Investment in India: Focus on manufacturing, fintech, education, clean energy
- Indian Investment in UK: Expected to reach £6 billion, creating 2,200 jobs
- Public Procurement: UK companies can now bid for select Indian government contracts in non-sensitive sectors
- IPR & Digital Trade: Protections for intellectual property and secure digital trade channels added
This is expected to strengthen India’s “Make in India” initiative and expand job creation in both countries.
Economic Impact
Projected Benefits:
- Trade Volume Growth: Expected to grow from $20.5 billion (2024) to $120 billion by 2030
- UK GDP Gains: Estimated at £4.8 billion annually
- Indian Export Boost: Especially for garments, footwear, gems, auto parts, pharma
- MSME Gains: Easier UK market access for small exporters in Ludhiana, Tiruppur, Surat, and Moradabad
Revenue Implications:
- India: Revenue foregone of ₹4,060 crore in year 1, rising to ₹6,345 crore by year 10
- UK: Annual tariff loss of ~£375 million
Despite short-term revenue losses, long-term economic benefits are expected to outweigh them.
Sector-Specific Gains
| Sector | Gain |
| Whisky/Gin | Up to 75% tariff cut initially; exports to India projected to double |
| Automobiles | Gradual tariff relief on UK EVs & luxury cars under quotas |
| Textiles | 8–12% duty eliminated; projected 45% export growth from hubs like Tiruppur |
| Jewellery | 10%+ duty reduction; Surat and Jaipur exporters to benefit |
| Footwear | Increased export competitiveness for Agra and Kanpur units |
Implementation & Outreach
- Government Outreach: Over 1,000 awareness programs planned across India
- Online Resources: FTA guidelines, tariff schedules, and sectoral FAQs to be made available in regional languages
- Industry Engagement: Dedicated helplines and export readiness programs for MSMEs
Summing Up
The India UK trade deal 2025 is not just a diplomatic win but a transformational economic pact. It reduces trade barriers, opens new markets, promotes investment, and simplifies skilled migration. As the first comprehensive FTA between India and a major Western power, it sets the stage for deeper integration into global value chains. For India, it boosts exports, empowers MSMEs, and makes the UK a critical partner in its economic rise. For the UK, it provides post-Brexit trade diversification, new consumer markets, and investment from one of the world’s fastest-growing economies.
