India and UK ink free trade deal, Britain's biggest since Brexit; PM Modi calls it 'historic day'

UK Prime Minister Keir Starmer meets PM Modi

Prime Minister Narendra Modi and his United Kingdom (UK) counterpart Keir Starmer on Thursday witnessed the signing of the landmark free trade agreement (FTA) between India and UK -- aimed at doubling the current $56 billion bilateral trade between the two nations by 2030.

The agreement was signed upon PM Modi's arrival in UK on Wednesday in the first-leg of his two-nation visit. On Thursday, he met his UK counterpart in London ahead of the formal signing of the FTA. The bilateral meeting took place at the historic Hawtry Room, where the two leaders held a one-on-one discussion to finalise the contours of what is being described as India's most comprehensive trade pact and the UK's most significant post-Brexit deal.

"Today marks a historic day in our relations. I am delighted that after the hard work of several years, today our two nations have signed the comprehensive economic and trade agreement," PM Modi said, adding that Indian textile, footwear, seafood, engineering goods, gems and jewellery exports will get better access to the UK market.

"This agreement will especially benefit Indian youth, farmers, fishermen and MSME sector. On the other hand, for the people of India and industry, products made in UK like medical devices will be available at reasonable and affordable prices," he added.

The FTA ensures zero tariffs on 99 per cent of Indian exports to the UK, covering nearly 100 per cent of trade value. The move will eliminate import duties on sectors like textiles, leather, footwear, gems, and jewellery, making Indian goods more competitive in the UK market.

The landmark trade pact is set to make it easier for British firms to export whisky, cars and other products to India besides boosting the overall trade basket. This agreement is a big win for farmers, ensuring duty-free exports on nearly 95 per cent of agricultural products, while fisherfolk gain from zero duty on 99 per cent of marine exports, boosting their incomes, commerce minister Piyush Goyal said.

Meanwhile, UK Prime Minister said that the deal is the "biggest and most economically significant" the country has made since leaving the EU. "It is a deal that will bring huge benefits to both of our countries -- boosting wages, raising living standards and putting more money in the pockets of working people. It is good for jobs, it is good for business, cutting tariffs and making trade cheaper, quicker and easier," he said.

Hours before meeting PM Modi, Starmer called the India trade deal a 'Plan for Change in action'.

In a post on X, Starmer wrote, "A landmark deal with India means jobs, investment and growth here in the UK. It creates thousands of British jobs, unlocks new opportunities for businesses and puts money in the pockets of working people."

According to a statement released earlier by the British High Commission, the UK-India trade agreement is expected to boost bilateral trade by £25.5 billion annually. The deal is also expected to unlock thousands of jobs, lower tariffs, and increase market access for businesses in both countries.

Formal talks began in 2022 on a free trade agreement that then-Prime Minister Boris Johnson hailed as a key goal after Britain’s departure from the European Union in 2020. Johnson famously promised to have a deal done by the Diwali holiday in October of that year.

The two countries held 13 rounds of negotiations without a breakthrough before talks were suspended while both nations held general elections in 2024.

Modi was re-elected and Britain replaced the Conservative government with one led by Starmer’s center-left Labour Party.

Meanwhile, India has also secured an agreement on the Double Contribution Convention. This will exempt Indian professionals and their employers from social security payments in the UK for up to three years, improving the cost competitiveness of Indian talent.

The agreement has been designed to make trade more inclusive. Women and youth entrepreneurs, farmers, fishermen, startups, and MSMEs will gain new access to global value chains, supported by provisions that encourage innovation, promote sustainable practices, and reduce non-tariff barriers, according to an official statement by the Ministry of Commerce and Industry.

(With inputs from agencies)