In May 2025, Prime Minister(PM) of India Narendra Modi and PM of the United Kingdom (UK) Keir Starmer announced the successful conclusion of a Comprehensive and Mutually Beneficial India–UK Free Trade Agreement (FTA) along with a Double Contribution Convention to boost bilateral trade, investment, and economic growth.
- The India–UK FTA aligns with India’s vision of Viksit Bharat (Developed India) 2047 and is expected to significantly enhance India’s participation in global value chains.
Background:
Negotiations for the India–UK Free Trade Agreement (FTA) were officially launched on January 13, 2022. After 14 rounds of negotiations, the two sides successfully concluded the agreement on May 6, 2025 .
Key Highlights:
i.The FTA ensures zero-duty market access for 99% of Indian exports to the UK, covering almost 100% of the trade value.
ii. It provides a major push to labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods, toys, gems and jewellery, and other sectors including engineering goods, auto parts and engines, and organic chemicals.
iii.The FTA also facilitates mobility for skilled professionals, including Independent Professionals, Business Visitors, and Intra-Corporate Transferees along with their dependents.
Impact:
i.India received strong commitments from the UK in Services, especially in Information Technology (IT)/Information Technology Enabled Services (ITeS), financial services, professional services, educational services, and other business services.
ii.The agreement promotes sustainable and inclusive growth, ensures resilient supply chains, and supports the ease of doing business.
iii.Bilateral trade between India and the UK currently stands at USD 60 billion, and the FTA is expected to double this volume by 2030.
About the Free Trade Agreement (FTA):
A Free Trade Agreement (FTA) is a legally binding pact between two or more countries aimed at reducing or eliminating barriers to trade. These agreements facilitate the free flow of goods and services across borders by minimizing tariffs, quotas, and other trade restrictions.
- As of May 2025, India has signed 14 FTAs and 6 Preferential Trade Agreements (PTAs) with various countries and regional blocs.
About Double Contribution Convention:
Alongside the FTA, the Double Contribution Convention was established to prevent double taxation for workers temporarily assigned between the two countries.
- Under this arrangement, Indian employees seconded to the UK are exempt from paying National Insurance Contributions, instead continuing contributions to India’s social security system, and vice versa for British workers in India.
About the United Kingdom (UK):
Prime Minister(PM) – Sir Keir Starmer
Capital – London
Currency – Pound Sterling (GBP)
