India-U.K. sign landmark free trade agreement

India and the United Kingdom officially signed the long-awaited Free Trade Agreement on Thursday. Union Commerce Minister Piyush Goyal took to X to announce the landmark India-UK Comprehensive Economic and Trade Agreement (CETA).

Duty-free access for about 99% of Indian exports to the U.K. unlocks nearly $23 billion in opportunities for labour-intensive sectors, marking a new era for inclusive and gender-equitable growth, Goyal said.

"Artisans, weavers, and daily-wage labourers employed in several MSMEs across textiles, leather, footwear, gems & jewellery, toys, and marine products will step into a new phase of prosperity," the commerce minister said. "From village looms to tech labs, this FTA marks a historic leap for women through improved access to finance and deeper integration into global value chains."

Goyal called the agreement a "big win" for farmers, ensuring duty-free exports on nearly 95% of agricultural products, while fisherfolk gain from Zero Duty on 99% of marine exports, boosting their incomes. "The deal will also have a transformative impact on manufacturing-intensive sectors like engineering goods, electronics, pharma, chemicals, food processing, and plastics. This agreement will also provide Indian consumers high quality goods at competitive prices," he said.

India’s talent in IT, services, and education will gain from easier access to the UK’s high-value markets, the commerce minister noted. "The three-year exemption from social security contributions in UK as part of the Double Contribution Convention is a significant breakthrough for Indian workers and their employers. Chefs, yoga instructors, musicians & business visitors will benefit, advancing our vision to be a global talent hub," he explained.

The FTA will open doors to UK customers, investors, and innovation hubs for our startups, helping them expand their global footprint, said Goyal. "This deal is a win-win for ‘Make In India’ and ‘Vocal For Local’, driving job creation, empowering communities, and reinforcing India’s strategic trade leadership. It ushers in a new era of economic cooperation, reinvigorating our bilateral trade ties"

Meanwhile, the U.K. government said on Thursday that India’s average tariff on UK products will drop from 15% to 3% which means British companies selling products to India, from soft drinks and cosmetics to cars and medical devices, will find it easier to sell to the Indian market.

Whisky producers in the U.K. will benefit from tariffs slashed in half, reduced immediately from 150% to 75% and then dropped even further to 40% over the next ten years, giving the UK an advantage over international competitors in reaching the Indian market, the British government said in a press statement.

U.K. Prime Minister Keir Starmer will welcome nearly 6 billion pounds in new investment and export wins, which will create over 2,200 British jobs across the country as Indian firms expand their operations in the UK and British companies secure new business opportunities in India, the statement said.

These deals are expected to drive jobs in Britain’s high-growth sectors like aerospace, technology and advanced manufacturing. “The UK’s large and varied manufacturing sectors will benefit from tariffs cut on aerospace (as high as 11% reduced to 0%), automotive (up to 110% down to 10% under a quota) and electrical machinery (from up to 22% down to either 0% of a 50% reduction),” the British government stated.

“Thanks to the deal, British workers will enjoy a collective uplift in wages of £2.2 billion each year and could also see cheaper prices and more choice on clothes, shoes, and food products,” the U.K. said.

The U.K. already imports £11 billion in goods from India, but liberalised tariffs on Indian goods will make it easier and cheaper to buy their best products. For businesses, this could mean potential savings when importing components and materials used in areas such as advanced manufacturing or luxury and consumer goods.

“Our landmark trade deal with India is a major win for Britain. It will create thousands of British jobs across the UK, unlock new opportunities for businesses and drive growth in every corner of the country, delivering on our Plan for Change,” said Starmer.

The two Prime Ministers have also signed a renewed Comprehensive and Strategic Partnership, which will see closer collaboration on defence, education, climate, technology and innovation. This comes exactly one year since the countries signed the landmark UK-India Technology Security Initiative, which sees joint work on telecoms security and unlocking investment across emerging technologies – telecoms, critical minerals, AI, quantum, health/bio tech, advanced materials and semiconductors.