India-UK FTA 2025: From Finalization to Implementation

India’s prime minister is expected to sign the India-UK Free Trade Agreement (FTA) on July 24, 2025. The pact was finalized on May 6, 2025, after over three years of intense negotiations between the two countries.

The multi-billion-pound trade deal is set to slash tariffs on 90 percent of traded goods, offering a significant boost to both economies as they navigate ongoing global trade disruptions.

According to multiple reports dated July 22, 2025, India’s union cabinet has approved the FTA between India and the UK. India’s Prime Minister Narendra Modi is likely to sign the deal, officially known as the Comprehensive Economic and Trade Agreement, during his visit to London on July 23-24.

Modi and UK Prime Minister Keir Starmer formally announced the successful conclusion of the India-UK FTA on May 6, 2025, marking a major milestone in their bilateral trade relationship. Upon the finalization of the FTA, the UK government announced that the new trade agreement is projected to boost annual bilateral trade between India and the UK by £25.5 billion.

This trade pact is set to be a cornerstone of India-UK collaboration under the framework of the 2030 Roadmap.

India–UK FTA set for signing on July 24, 2025: Reports

Modi will begin a two-day visit to London on July 23, 2025, amid strong indications that he will formally sign the long-anticipated FTA between India and the UK. Union Minister of Commerce and Industry Piyush Goyal will accompany him during the visit. According to media reports, the signing is expected to take place on July 24.

India’s Foreign Secretary Vikram Misri clarified that the finalization of the agreement still hinges on the completion of legal vetting.

The FTA seeks to eliminate tariffs on key Indian exports such as leather goods, footwear, and apparel, while reducing import duties on major UK products like whisky and automobiles. Both countries aim to significantly boost bilateral trade, with targets to double it to US$120 billion by 2030.

As part of his four-day international tour, Prime Minister Modi is visiting both the UK and the Maldives to strengthen cooperation in trade, investment, and defense.

Once signed, the FTA will proceed to the British Parliament for ratification. Authorities anticipate the implementation process will take approximately one year.

India-UK FTA to boost economic integration: S&P Global

India’s trade pact with the UK is poised to enhance Indian export potential, improve mobility of skilled workers, and provide British businesses greater access to India’s expanding middle-class market, according to a report released by S&P Global Market Intelligence on July 2, 2025.

S&P Global also states the agreement will bolster India’s merchandise and manufacturing exports to the UK, reinforcing the positive export momentum already in place. Sectors such as textiles and apparel—currently facing barriers in the US market—are likely to benefit from reduced trade restrictions and improved market access in the UK.

A key objective of the deal is to double bilateral trade in goods and services by 2030.

On the labor front, the agreement introduces measures that will benefit Indian professionals working in the UK, particularly in the information and communication technology (ICT) sector. A waiver on national insurance contributions for up to three years is expected to increase their savings and, in turn, boost remittances to India. In 2024, India received an estimated US$130 billion in remittances—around 3.3 percent of GDP—with the UK ranking as the third-largest source after the US and UAE.

The UK, in return, is expected to gain progressively from enhanced access to India’s growing consumer base. One immediate benefit for British exporters will be a reduction in tariffs—by up to 50 percent—on 97 percent of alcohol exports, including whisky and gin.

Strategic gains amid FTA gaps

However, some aspects of the deal remain unclear. For instance, although the UK will benefit from tariff reductions on automotive exports under a quota system, the framework for implementation lacks clarity. Additionally, the agreement excludes pharmaceuticals, which limits the UK’s potential economic gains.

Through the trade agreement, India aims to expand its partnerships with strategically important economies. It is actively working to finalize similar trade pacts with Gulf countries, as well as with Australia, Japan, Southeast Asian nations, and Latin American markets in 2025 and 2026. These agreements aim to strengthen India’s position in global trade and reduce its dependence on traditional partners.

The FTA also represents a strategic milestone for the UK, as it supports the country’s post-Brexit trade realignment and addresses supply chain vulnerabilities.

India–UK FTA to unlock £25.5 billion in trade: UK Trade Commissioner for South Asia

On June 13, 2025, the the UK Trade Commissioner for South Asia and Deputy High Commissioner for Western India described the agreement as more than just a trade deal—calling it a “blueprint for the next phase of UK–India economic cooperation.” The FTA eliminates tariffs on 99 percent of Indian exports to the UK and 90 percent of UK exports to India, opening substantial opportunities for manufacturers and service providers.

India and the UK will now proceed with legal review, Prime Ministerial signing, parliamentary ratification (expected within 9–12 months), and phased implementation. The trade commissioner emphasized that the agreement liberalises services, introduces quota-based reductions in auto tariffs, and establishes a future-ready tech and security corridor, with potential expansion into pharmaceuticals, semiconductors, and green technology.

As part of the agreement, the UK will gradually reduce its import duty on whisky from 150 percent to 40 percent over the next decade. It may be noted that the Carbon Border Adjustment Mechanism (CBAM) will not apply under the FTA, alleviating concerns among Indian exporters.

The agreement liberalises trade in services, covering 36 sectors under Contractual Service Suppliers (CSS) and 16 under Independent Professionals (IP)—spanning IT, R&D, chefs, yoga instructors, and artists. Additionally, both countries will negotiate a reciprocal Social Security Agreement, enabling employees on temporary assignments (up to three years) to continue contributing to their home country’s social security system.

Approval process of India-UK FTA 

The India-UK FTA, comprising 26 chapters, is expected to take around 15 months for full implementation. As per media reports, this timeline includes three months for legal scrubbing of the finalized text, followed by up to a year for ratification by the UK Parliament.

In India, the agreement requires approval from the Union Cabinet. This was cleared on July 22, 2025. In the UK, the FTA must pass through parliamentary ratification. Once implemented, the agreement is anticipated to enhance bilateral trade, streamline market access, and support investment flows between the two nations.

Top highlights of India-UK FTA

• Zero-duty market access: Approximately 99 percent of Indian exports will enjoy zero-duty access to the UK market, enhancing export competitiveness.
• Tariff reductions for Indian imports: Import duties on 90 percent of tariff lines will be reduced, with 85 percent of these becoming completely tariff-free over the next 10 years, offering notable savings for Indian consumers and businesses.
• Lower tariffs on key UK exports: India has agreed to lower tariffs on a range of high-value British exports, including whisky, medical devices, advanced machinery, and lamb, making these products more competitive in the Indian market.
• Reduced costs for Indian consumers: The agreement cuts import duties on a wide range of products, including cosmetics, aerospace components, medical equipment, salmon, electrical machinery, soft drinks, chocolates, and biscuits, potentially lowering consumer prices in India.
• Affordable British imports: UK consumers will benefit from reduced costs on popular Indian imports such as clothing, footwear, and various food items, including frozen prawns.
• Automotive tariff reductions: Tariffs on automobiles will drop significantly, from over 100 percent to 10 percent under a special quota system, reducing costs for UK automakers exporting to India.
• Social security savings: Indian professionals working temporarily in the UK will benefit from a three-year exemption from social security contributions, reducing the financial burden for both employees and employers.
• Expanded export opportunities for key sectors: The agreement is expected to boost exports from India’s labor-intensive sectors, including textiles, marine products, leather, footwear, sports goods, toys, gems and jewelry, engineering goods, auto parts, engines, and organic chemicals, creating new business and employment opportunities.

Social security savings for Indian workers in the UK

The two countries formally announced the conclusion of the Double Contribution Convention alongside their FTA. This pact is intended to eliminate the requirement for Indian professionals on short-term assignments in the UK to pay double social security contributions. It addresses a long-standing demand from Indian businesses seeking to reduce the financial burden associated with deploying skilled professionals abroad.

Currently, Indian professionals working temporarily in the UK are required to make mandatory National Insurance (NI) contributions, which can cost approximately £500 per employee each year, in addition to other taxes and healthcare charges. However, these professionals often do not benefit from these contributions, as they typically return to India once their assignments are complete.

Workforce mobility and employment growth

The FTA is expected to create substantial employment opportunities in high-growth sectors such as manufacturing, technology, and professional services. It aims to facilitate the movement of skilled professionals, making it easier for business visitors, investors, intra-corporate transferees, and independent professionals, including yoga instructors, musicians, and chefs, to work across borders.

Additionally, Indian professionals in digital sectors such as architecture, engineering, computer services, and telecommunications will benefit from improved access to the UK market.

India excludes key sectors from tariff cuts in the FTA

Under the trade agreement, India excludes several industrial products—such as diamonds, silver, smartphones, and optical fibers—from tariff concessions, as per media reports. Furthermore, duty relief on imports of petrol and diesel vehicles will be restricted to a fixed quota, while electric vehicle (EV) concessions will be capped at a few thousand units.

Key items placed on the exclusion list include plastics, base stations, television camera tubes, and related components, indicating India’s strategic protection of certain industries. For ICE (internal combustion engine) vehicles, duty reductions will be phased in gradually to shield domestic manufacturers.

The finalized deal aims to ease UK access for products like luxury cars. Automotive tariffs will fall from over 100 percent to 10 percent under quota limits, benefiting firms like Tata Motors and its subsidiary Jaguar Land Rover.

Despite strong EV growth in India—with April 2025 sales up 56.87 percent year-on-year to 12,233 units—imports from the UK remain limited, totaling just US$2.75 million in 2024. Premium UK brands like Bentley and Rolls-Royce cater to a niche market.

India has also reportedly opted for a phased reduction of duties on other sensitive items, including ceramics, petroleum products, chemicals, aircraft engines, and engineering equipment. 

An overview of India-UK trade dynamics

The India-UK FTA comes at a time of strong bilateral trade, with current merchandise trade valued at around US$21.3 billion. In FY 2023-24, India recorded a trade surplus with the UK, exporting goods worth US$12.92 billion against US$8.41 billion in imports.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

CLICK HERE: India’s FTA Updates 2025

Both countries have set a target to reach a total trade target of US$120 billion by 2030. The deal spans multiple sectors, including goods, services, and technology, aiming to support sustainable and inclusive economic growth, build resilient supply chains, and create high-quality jobs in India.

Past India-UK FTA negotiations

Negotiations for an FTA between India and the UK began in January 2022, marking an important step in the UK’s independent trade policy following Brexit. However, the talks experienced intermittent progress, partly due to political transitions in the UK, which saw four different prime ministers in office during this period, as well as national elections in both countries in 2024.

After the Labour Party came to power in July 2024, the UK swiftly moved to finalize the agreement, resuming negotiations with India in February 2025. The deal was concluded following a series of intensive discussions between the trade ministers of both countries in London on April 28-29, 2025.

(This article was originally published on May 7, 2025. It has been updated July 22, 2025.)

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