PM Modi and Starmer Seal Ambitious India-UK Free Trade Agreement in Major Diplomatic Win

In a momentous breakthrough hailed as a historic turning point, India and the United Kingdom have signed an “ambitious and mutually beneficial” India-UK Free Trade Agreement, marking the culmination of over three years of intense negotiations and diplomatic perseverance.

Prime Minister Narendra Modi, in a personal conversation with his British counterpart Keir Starmer, announced the finalisation of the long-anticipated pact. The agreement, alongside a new Double Contribution Convention, is set to catalyse a deeper strategic partnership between two of the world’s most influential economies.

“Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement,” Modi posted on X (formerly Twitter) Tuesday evening.

He emphasized the transformational impact of this deal, highlighting its potential to drive trade, investment, innovation, growth, and employment in both nations.

A Journey Marked by Diplomatic Resilience

The India-UK Free Trade Agreement was originally targeted for completion by October 2022, under then British PM Boris Johnson. However, the road to finalisation was far from smooth. Political upheaval in the UK and differences over tariff structures—particularly on alcohol, automobiles, and services—posed recurring obstacles.

Yet, the spirit of diplomacy triumphed. The final breakthrough came after back-to-back visits by Indian Commerce Minister Piyush Goyal to London last week, during which high-level meetings with British Trade Secretary Jonathan Reynolds pushed the agreement across the finish line.

Unlocking Economic Potential

According to the latest trade data from the UK government, India ranks as the UK’s 11th largest trading partner, contributing 2.4% of total UK trade in the four quarters leading to the end of Q4 2024.

• Total bilateral trade stood at £42.6 billion, up 8.3% year-on-year.

• Indian exports to the UK were valued at £25.5 billion, showing a 10.1% increase.

• UK exports to India hit £17.1 billion, marking a 5.8% growth.

These figures underline the growing interdependence of the two economies—an interdependence now given a robust legal and institutional framework through this agreement.

Strategic Benefits and Shared Vision

Describing the deal as a “historic milestone,” both leaders highlighted that the India-UK Free Trade Agreement will open new gateways for business expansion, people-to-people collaboration, and cutting-edge innovation. It also underscores both countries’ shared vision of an open and inclusive global economic order.

PM Starmer, in a statement shared by the Indian side, remarked,

“Strengthening alliances and reducing trade barriers with economies around the world is at the heart of the UK’s Plan for Change to deliver a stronger and more secure economy.”

The pact also aligns with India’s Atmanirbhar Bharat (Self-Reliant India) initiative and the UK’s post-Brexit strategy to build modern, future-facing trade alliances.

What Comes Next?

While the formal announcements are expected later this evening, officials from both sides have confirmed that the agreement includes comprehensive chapters on:

• Tariff reductions and market access

• Investment protections

• Sustainability and innovation

• Labour mobility and skills exchange

The upcoming months will witness a phase of implementation, where regulatory adjustments and business outreach will roll out to ensure inclusive economic gains on both sides.

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