“In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial free trade agreement,” Prime Minister Modi posted on X.
A brief posted by the Press Information Bureau (PIB) said 99% Indian exports to benefit from zero duty. It is expected to open up massive export opportunities for labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, and other important sectors such as engineering goods, auto parts and engines, and organic chemicals.
The Gains
There will be significant boost to trade in services, such as IT/ITeS, financial services, professional services, other business services and educational services. Also stronger strategic alignment and greater global mobility for aspirational young Indians.
There will be three-years exemption from social security payments for Indian employees working in the UK, the PIB note said.
It will benefit Indian farmers, fishermen, workers, MSMEs, startups and innovators. It brings us closer to our goal of becoming a global economic powerhouse. This FTA is not only about goods and services, but also about people, possibilities and prosperity. It protects our core interests while opening doors to India’s greater participation in global value chains”.
The Commerce Secretary Shri Sunil Barthwal emphasised that this FTA is a game changer and will set India further on the path of rapid economic growth and benefit India’s global integration. This is the most comprehensive free trade deal ever entered into by India and will be the gold standard for our future engagements.
Hard Negotiations
The FTA takes place in the backdrop of growing economic relations between India and the UK as exemplified in the bilateral trade of about $60 billion which is projected to double by 2030.
This comprehensive and forward-looking agreement is the culmination of intense negotiations aimed at deepening trade and investment ties across a range of sectors, including goods, services and technology. It is designed to promote sustainable and inclusive economic growth, ensure resilient supply chains and generate high-quality employment in India.
The FTA eases mobility for professionals including Contractual Service Suppliers; Business Visitors; Investors; Intra-Corporate Transferees; partners and dependent children of Intra-Corporate Transferees with right to work; and Independent Professionals like yoga instructors, musicians and chefs.
Opportunities For Youth
Immense opportunities for talented and skilled Indian youth will open up in the UK which is a major global centre for digitally delivered services due to its strong financial and professional services sectors and advanced digital infrastructure.
India has secured significant commitments on digitally delivered services for Indian service suppliers, specially in professional services such as architecture and engineering, computer related services and telecommunication services.
The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market that would create new job opportunities as well as benefit large number of Indians working in the UK.
India has ensured that non-tariff barriers are suitably addressed to ensure free flow of goods and services and that they do not create unjustified restrictions to India’s exports, the PIB note said.
The FTA seeks to promote good regulatory practices and enhance transparency that are in sync with India’s own focus on domestic reforms to enhance the ease of doing business.
As two leading democracies and global innovation hubs, India and the UK reaffirm their commitment to strengthening economic cooperation and working together to address global challenges. The India – UK FTA sets a new benchmark for fair, ambitious, and modern trade agreements worldwide.
The breakthrough appears to have coincided with the visit of Commerce Minister Piyush Goyal to London late last week, when he met Trade Minister Jonathan Reynolds. It was their second meeting in a week. He also had discussions with Chancellor of the Exchequer Rachel Reeves.
But as a trade expert noted, “has India conceded ground on government procurement and our ability to subsidise manufacturing. And then there would be a plethora of non-trade issues – environment labour and gender.”
Another noted that “The deal’s true test lies in how the UK’s Carbon Border Adjustment Mechanism (CBAM) is handled. If Indian exports still face CBAM levies while UK goods enter India duty-free, it risks turning a balanced FTA into a one-sided bargain. Let’s hope this elephant in the room wasn’t ignored.
