UK and India Sign Free Trade Agreement During Modi’s Visit

The United Kingdom and India have signed a historic free trade agreement during Indian Prime Minister Narendra Modi’s two-day visit to the UK. The agreement, signed at Chequers, British Prime Minister Keir Starmer’s country estate, aims to reduce tariffs on a wide range of goods, including textiles, whisky, cars, and spices, while expanding market access for businesses from both nations. Trade ministers Jonathan Reynolds (UK) and Piyush Goyal (India) officially signed the deal, marking a significant step in strengthening bilateral economic relations.

Prime Minister Keir Starmer hailed the agreement as a "landmark moment" for both countries. He emphasized that it is the UK’s most significant and economically impactful trade deal since Brexit, expected to contribute £4.8 billion annually to the British economy. Though the UK’s Office for Budget Responsibility (OBR) has predicted that post-Brexit trade volumes may decline by about 15% in the long term, this new deal is seen as a crucial move to counteract that impact and foster new global partnerships.

Negotiations for this deal began three years ago but faced multiple delays. However, progress accelerated recently amid global trade uncertainties, particularly influenced by tariff changes during former U.S. President Donald Trump’s tenure. The agreement still requires ratification by the UK Parliament to take full effect.

Modi described the agreement as a “blueprint for shared prosperity,” stating that it marks India's most substantial strategic partnership with a developed economy. He believes the deal could serve as a model for future agreements with the European Union and other global regions. For India, the deal signals a new level of economic cooperation and global integration.

In addition to the free trade agreement, both countries announced approximately £6 billion ($8 billion) in trade and investment partnerships across emerging sectors like artificial intelligence (AI), aerospace, and dairy. The two leaders also committed to working more closely in strategic areas such as defence, migration, climate change, and public health.

According to official projections, the agreement is expected to increase bilateral trade by £25.5 billion ($34.4 billion). The UK government stated that India’s average tariff on British goods will be cut from 15% to 3%. Whisky and gin import duties will be reduced from 150% to 75%, and gradually lowered to 40% within ten years. Tariffs on automobiles, currently exceeding 100%, will drop to 10% under a quota system. India’s Commerce Ministry confirmed that 99% of Indian exports, including apparel, footwear, and food products, will enjoy zero import duty in the UK under the deal.

India and the UK, the fifth and sixth-largest global economies respectively, currently share a trade relationship valued at £41 billion ($55.3 billion), supporting over 600,000 jobs across both nations.

During Modi’s visit, the leaders also discussed the tragic Air India plane crash on June 12, which killed 241 people, including 169 Indian passengers and 52 British nationals, after taking off from Ahmedabad for London. It was one of the deadliest crashes involving British citizens.

This was Modi’s fourth UK visit since becoming India’s Prime Minister in 2014. He was also scheduled to meet King Charles III during his stay, following recent meetings with Starmer at the G7 summit in Canada and the G20 summit in Brazil.