UK and India Forge Future: Landmark FTA Promises Cheaper Goods, More Jobs, and Green Growth

India and the UK officially signed a major free trade agreement on Thursday, 24th July. Prime Minister Narendra Modi and UK Prime Minister Keir Starmer were present at the signing ceremony during Modi’s visit to Britain. This deal, which was first approved in May, is now fully confirmed.

The main goal of this agreement is to double trade between the two countries to $120 billion (around ₹10 lakh crore) by 2030. It is expected to boost businesses and create new jobs in both nations.

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Implementation Timeline and Approval

Commerce and Industry Minister Piyush Goyal and UK Trade Minister Jonathan Reynolds formally signed the agreement. However, the deal still needs approval from the British Parliament before it can take effect. This process is expected to take about one year.

After the signing, Minister Goyal posted on social media:
“Congratulations to Prime Minister @NarendraModi ji, UK Prime Minister @Keir_Starmer, and the people of India and the UK on signing this important India-UK trade agreement.”

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How the Deal Helps Factories and Industries

The agreement will cut import taxes (also known as tariffs), making it cheaper for both countries to buy and sell goods. This benefits key industries like automobiles, aerospace, and machinery.

• Car Industry: Import taxes that were once as high as 110% will now drop to 10% (within specific limits), making British cars more affordable in India.
• Aerospace: Companies that build aircraft or parts will no longer pay the earlier 11% import duty. It has been cut to zero, making trade much easier.
• Electrical Machinery: Tariffs on machines like motors and generators will be reduced from 22% to either zero or 50%, depending on the item.

This will help businesses lower costs, trade more freely, and offer better prices to consumers.

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Boost for Clean Energy Projects

The deal opens up India’s large government market for UK clean energy companies. As India shifts towards renewable energy—like solar and wind—to meet growing electricity needs, British firms will now be able to offer their services and invest more easily.

This helps the UK support India’s green energy journey and promotes clean power in both countries.

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Technology Companies Bringing Jobs and Investment

Several Indian technology companies are investing in the UK as part of the new trade partnership. Two key examples include:

• Zerowatt Energy: Based in Trivandrum, this company uses AI to improve energy use. It is setting up its global headquarters in Leicester, investing £10 million (around ₹105 crore) and creating 50 jobs across Leicester, Manchester, Edinburgh, and London over the next three years.
• DCube AI: Also from Trivandrum, this AI and data services company is investing £5 million (around ₹52 crore) in its UK operations and will create 50 jobs in Manchester and London.

As reported by Ackodrive media, these investments will boost the tech sector and generate more employment in both countries.

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Aerospace Deals Worth £5 Billion (About ₹52,500 Crore)

Twenty-six UK companies have landed new business opportunities in India. A major highlight is that Airbus will begin delivering aircraft to Indian airlines, with over half of them powered by Rolls-Royce engines.

These deals are valued at £5 billion (about ₹52,500 crore) and will support hundreds of jobs in UK cities like Filton, Broughton, and Derby. It’s a major win for the aerospace sector in both countries.

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UK Financial Companies to Get Equal Access in India

The agreement allows UK banks, insurance companies, and other financial service providers to operate more freely in India’s growing economy.

It also ensures that UK companies—especially in the insurance sector—will receive the same treatment as Indian firms. This builds trust and encourages more investment from the UK into India’s financial markets.

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Cheaper British Goods Coming to India

The trade deal reduces taxes on many British products sold in India, making them more affordable for Indian consumers.

• Whisky and gin: Import duties will be cut from 150% to 75%, and later to 40% over the next 10 years.
• Cars: Taxes on UK-made cars will fall from over 100% to just 10%, but within set limits.

Indian shoppers will also see lower prices on goods like perfumes, chocolates, biscuits, soft drinks, medical devices, salmon, and beauty products.

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Big Boost for Indian Industries That Create Jobs

The deal supports Indian sectors that employ large numbers of people, such as:

• Textiles and clothing
• Seafood and marine products
• Leather goods and footwear
• Sports goods and toys
• Jewellery and gems
• Auto parts and engineering products
• Organic chemicals

99% of Indian exports will get duty-free access to UK markets. Tariffs will also be reduced on labour-heavy goods like leather, shoes, and garments. This will help Indian products become more competitive in the UK and create more jobs back home.

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Trade Between India and the UK Is Growing

Recent data shows a steady rise in trade between the two nations:

• India’s exports to the UK in 2024–25 rose by 12.6%, reaching $14.5 billion (about ₹1.2 lakh crore).
• Imports from the UK grew by 2.3% to $8.6 billion (around ₹71,500 crore).

Overall, total trade between the two countries increased to $21.34 billion (around ₹1.8 lakh crore) in 2023–24—up from $20.36 billion (around ₹1.7 lakh crore) in 2022–23. This shows a strong and growing economic relationship.

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What’s Included in the India-UK Trade Deal

The Free Trade Agreement covers many important areas, including:

• Goods trade (like clothing, cars, machines)
• Services (such as banking, tourism, and IT)
• Technology and innovation
• Government purchases
• Protection of ideas and inventions (intellectual property)

The deal removes or reduces taxes on most traded items and makes rules easier so that companies can provide services and invest across borders more smoothly.

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