India-UK Free Trade Agreement Marks New Era for Bilateral Trade and Investment

May, 7 2025

A Landmark Free Trade Agreement Between India and the UK

The signing of the India UK FTA on May 6, 2025, didn’t just tick off another diplomatic box – it kicked open doors for major economic shifts on both sides. When Prime Minister Narendra Modi and his UK counterpart Sir Keir Starmer shook hands on this deal, it capped off years of negotiations, missed deadlines, and plenty of hype. But the result? Nothing short of a game changer for how the two countries do business.

Let’s start with what’s actually in it. British goods like whisky and gin – products that have faced staggering tariffs entering India – will soon see those barriers melt away. For whisky, import tariffs were a huge thorn, making bottles nearly twice as expensive in India as they are elsewhere. The FTA slices those tariffs down in phases, which should have British distillers raising a glass and Indian consumers (and bartenders) looking forward to a wider variety at much friendlier prices.

Meanwhile, Indian exporters get a major boost with duty-free access for textiles, leather goods, and processed foods. Textile producers in places like Surat and Ludhiana have complained for years about how UK duties eroded their global competitiveness. With this new access, they can better compete on a level playing field, sending everything from garments to specialty foods straight into British stores without customs fees chewing up profit margins. It’s a direct win for Indian small and medium businesses.

Beyond Tariffs: What This Means For Both Economies

The FTA doesn’t just fiddle with customs codes. It also attacks non-tariff barriers that, in practice, can be just as annoying—like strict product standards or complicated licensing. Add a fresh new Double Contribution Convention, which means workers and employers won’t get double-taxed on social contributions if they’re doing cross-border business or posting employees. For example, an Indian company that posts tech workers to the UK will now have less to worry about on overlapping taxes, which should make it easier to pick up projects or send staff overseas.

Bilateral trade between the two topped £42.6 billion in 2024, but both governments want much more. With the FTA in place, expect to see new investments in fields like green energy, professional services, and digital tech. For major UK brands, India’s massive and rapidly growing middle class is a golden ticket, and for Indian companies, London’s financial and tech infrastructure offers a launchpad to the rest of Europe.

Of course, timing matters. The global trade scene is a mess right now—wars, supply chain breakdowns, unpredictable tariffs between big economies. So, this deal plants both countries firmly on each other’s team, creating a backup plan if relations with other trade powers get rocky. In a world that seems more protectionist and suspicious than ever, India and the UK are betting on open markets – and hoping it pays off with new jobs, fresh investment, and stronger economic ties that compete at a global level.