A Milestone in Post-Brexit Trade Policy
India and the United Kingdom have finalized a landmark free trade agreement (FTA), representing the most substantial trade accord signed by the UK since leaving the European Union. Announced on May 6, 2025, the deal arrives after over three years of on-and-off negotiations and aims to significantly bolster economic ties between the two nations.
Launched in January 2022, the India-UK trade talks became a central part of Britain’s strategy to reshape its global trade relations independently post-Brexit. This agreement is expected to boost bilateral trade by £25.5 billion ($34 billion) by 2040, offering enhanced market access, reduced tariffs, and liberalized trade policies across key sectors.
Prime Minister Narendra Modi emphasized the transformative nature of the deal, calling it a catalyst for “trade, investment, growth, job creation, and innovation in both our economies.”
Key Provisions and Economic Implications
The agreement introduces reduced tariffs on several British exports including whisky, advanced manufacturing components, lamb, salmon, chocolate, and biscuits. In exchange, India gains greater access for its goods and services into the UK, with import quotas for the automobile sector being among the critical elements.
British Prime Minister Keir Starmer hailed the agreement as a strategic move to revitalize the UK’s economy. “We are now in a new era for trade and the economy,” Starmer said. “Strengthening our alliances and reducing trade barriers with economies around the world is part of our plan for change.”
With both countries also seeking to resolve ongoing trade frictions with the United States stemming from tariffs imposed under former US President Donald Trump, this deal sets a clear trajectory for both India and the UK in building resilient, diversified trade networks.
Strategic and Political Significance
This trade pact marks a strategic shift for India, signaling a willingness to open up traditionally protected markets such as automobiles, and setting the tone for future negotiations with Western powers like the US and the EU.
The road to finalizing the agreement was anything but smooth. Since negotiations began, the UK has seen four different prime ministers, while both countries underwent national elections. Despite these political upheavals, both governments prioritized the deal, recognizing its long-term strategic value.
As the global economic landscape becomes increasingly fragmented, the India-UK free trade agreement stands as a powerful example of bilateral cooperation that transcends political transitions and trade tensions, aiming for mutual prosperity.
