India, UK ink historic deal to nearly double trade in five years

India and the United Kingdom signed a landmark free trade agreement on Thursday, committing to slash tariffs, unlock investment and significantly boost the flow of goods, services, and skilled labor between the two economies.

The deal, formally called the Comprehensive Economic and Trade Agreement (CETA), was signed during Prime Minister Narendra Modi’s visit to the UK, where he met his British counterpart Keir Starmer at the Chequers estate, the British prime minister’s official country retreat that is often used for high-level diplomatic engagements.

The deal marks the UK’s most expansive post-Brexit trade pact to date and concludes a protracted negotiation process spanning five years and four British prime ministers.

Modi called the pact a “historic achievement” that would “create opportunities for farmers, women, youth, MSMEs, and professionals,” while Starmer said it would deliver “jobs, investment, and growth” across the UK.

A new chapter begins today in the India–UK economic partnership! The signing of the Comprehensive Economic and Trade Agreement (CETA) reflects our shared commitment to enhancing trade, driving inclusive growth and creating opportunities for farmers, women, youth, MSMEs, and… pic.twitter.com/FUOo4dkHLU

— Narendra Modi (@narendramodi) July 24, 2025

“This is change in action,” Starmer wrote on X.

The agreement is expected to nearly double bilateral trade volumes to $120 billion by 2030, up from roughly $70 billion today.

UK officials project an uplift of £4.8 billion to Britain’s annual GDP and £2.2 billion in additional wages, citing gains across sectors including aerospace, automotive, clean energy, and advanced manufacturing.

Under the deal, India will cut tariffs on 90% of UK goods, reducing average duties from 15% to just 3%.

UK exporters will gain preferential access in sectors such as whisky, automobiles, medical devices, and aerospace components.

Scotch whisky duties in India will be halved immediately from 150% to 75% and cut further to 40% over 10 years.

Indian textiles, apparel, pharmaceuticals, marine products, and processed foods will benefit from zero-duty access to the UK market.

The UK’s Department for Business and Trade said the deal would create over 2,200 British jobs and unlock nearly £6 billion in new investment and export wins.

India, for its part, expects the FTA to provide a leg up for its labor-intensive sectors while advancing its push for technology-enabled, inclusive growth.

Beyond goods, the agreement includes streamlined visa pathways for professionals, mutual recognition of qualifications, and a bilateral social security pact to eliminate double contributions for temporary workers.

Officials on both sides emphasized the strategic dimension of the deal under the India–UK Vision 2035 framework, which calls for deeper cooperation in innovation, digital infrastructure, green mobility, and resilient supply chains.

“Continuous innovation is the expectation of this era,” Modi said in a statement. “With the FTA in place, skilled professionals from both countries will shape a new global landscape.”

Indian and British business leaders were quick to welcome the agreement.

Anil Agarwal, chairman of Vedanta Group, called it a “win-win” that would spur jobs and entrepreneurship on both sides.

“A lot of hard work has gone into it,” he said. “This will boost economic activity and increase trade by at least $20 billion.”

Anish Shah, CEO and MD of Mahindra Group, said the deal was “a transformative moment in the global economic landscape,” and “a blueprint for a values-led partnership” anchored in sustainability, technology, and shared growth.

He noted that the agreement aligns closely with Mahindra’s priorities from clean energy to frontier tech investments.

Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA), said the agreement’s provision for zero-duty access to UK markets for Indian electronic products – including smartphones, inverters, and optical fiber cables “will significantly advance Make in India for the World ” initiative. Mohindroo added that with bilateral trade projected to double by 2030 and India’s domestic electronics manufacturing ecosystem targeted to reach $500 billion, this partnership positions both India and the UK for substantial economic growth.

The CETA marks a significant convergence of economic ambition and geopolitical alignment, as both countries seek to diversify trade relationships amid a shifting global order.

The pact follows India’s recent FTAs with Australia and the UAE, and the UK’s efforts to deepen ties with Indo-Pacific economies after leaving the European Union.