India and United Kingdom sign the historic free trade agreement (FTA) in the presence of both PMs and was signed by Union Minister Piyush Goyal and his British counterpart Jonathan Reynolds on July 24, 2025. 
| Photo Credit: Getty Images

The story so far:India and the U.K. signed a Comprehensive Economic and Trade Agreement (CETA) on Thursday, after having announced the conclusion of negotiations on the deal in May this year. With negotiations starting in January 2022, the deal marks a more than three-year effort to enhance bilateral trade between the two countries.

What has broadly been agreed to?

Under the deal, the U.K. has removed tariffs on 99% of its product lines. However, not all of these product lines are exported by India to the U.K. According to an analysis by the Global Trade Research Initiative, about $6.5 billion or 45% of what India currently exports to the U.K. — such as textiles, footwear, carpets, automobiles, seafood, and fresh fruits such as grapes and mangoes — will now enter the U.K. duty-free. The remaining $8 billion worth of goods that India exports to the U.K. — petroleum, pharmaceuticals, diamonds, and aircraft components — already enjoy zero duty access. India has agreed to either eliminate or reduce duties on 90% of its tariff lines, which comprises about 92% of what the U.K. exports to us, according to data with the U.K. government. Alcohol from the U.K., especially whiskey, is set to become cheaper in India, as are British cars, and engineering products.

The U.K. is a relatively small trading partner for India. About 3.3% of India’s exports in 2024-25 went to the U.K., and the U.K. made up 1.2% of India’s imports that year.

Is the deal restricted to the goods trade?

No, the CETA incorporates a significant section on services, which is especially of interest to India since services exports are a vital engine of growth. Under the ‘economic’ component of the deal, India has agreed to open up some key sectors of its service economy to U.K. firms, such as accounting, auditing, financial services, telecom, and environmental services.

What this means is that U.K. companies operating in these sectors can offer their services to Indian customers without first having to establish a local presence here. Despite this, they will be treated at par with Indian firms. India has also agreed to recognise U.K. professional qualifications in law and accounting, but not in legal services.

The U.K. has agreed to grant commercial presence rights to Indian companies in sectors such as computer services, consultancy, and environmental services. This means Indian companies operating in these sectors can set up branches, subsidiaries, or representative offices in the U.K.

One major positive for India arises out of the Double Contribution Convention (DCC), which is a parallel agreement between the two countries that was negotiated simultaneously, and that will come into force when the CETA does. Under the DCC, the U.K. will allow 75,000 Indian workers on short U.K. assignments to continue paying into India’s social security system without also having to pay the same in the U.K. This is highly beneficial for Indian workers in the U.K. since many of them work there for so short a stint that they do not get to avail of the benefits of social security there while having to contribute to it.

Is the deal a standard one or does it include unusual aspects?

While the broad contours of the deal are pretty standard, dealing with tariff and non-tariff barriers, there are some aspects that are unusual. The first is to do with auto tariffs. India has, for the first time, included cuts in its tariffs on imported cars in a trade deal.

Large-engine luxury petrol cars imported into India from the U.K. will see their import duty cut to 10% over 15 years from the current maximum of 110%. However, this is subject to a quota starting at 10,000 units and rising to 19,000 in the fifth year of the deal. For mid-sized cars, the tariff has been cut to 50% subject to a quota, which will fall to 10% by year five.

Small cars will enjoy a similar tariff reduction and growing quota.

The idea behind the quota, according to government sources, is to allow the domestic industry enough time to prepare to compete with U.K. imports. Further, nascent industries such as electric vehicles have been further protected with no duty concessions being given for electric, hybrid, and hydrogen-powered vehicles for the first five years.

The other unusual aspect of the deal is that U.K. firms will now be allowed to participate in Indian central government procurement bids. India will open about 40,000 high-value contracts from central ministries and departments in sectors such as transport, green energy, and infrastructure.

So what next?

The deal does not come into effect immediately. It needs to be ratified by the Parliaments of both countries, a process that could take as long as six months to a year. For India, the deal also serves as a template for future deals with other economies, such as the U.S. and the EU, both of which are in various stages of negotiation.

Published – July 27, 2025 05:00 am IST

New Delhi:

India and the UK have been working towards clinching a pact to enhance the 38.1 billion pounds bilateral trading partnership but with India’s phased general election followed by Britain’s, the negotiations remain stalled. With both the elections done, the Free Trade Agreement (FTA) talks, which have been going on for two years, are expected to resume.

Keir Starmer, Labour Party leader set to be the UK’s new Prime Minister, has constantly maintained that he wants to maintain good ties with the Narendra Modi administration, marking a departure from past policies under Jeremy Corbyn.

“We are confident that we have cleansed our ranks of any members with extremist views on India,” Labour Party Chair Anneliese Dodds had said days ahead of the elections.

The FTA also featured prominently in the party’s poll manifesto which stated their “commitment to pursue a new strategic partnership” with India.

Starmer has pledged to forge a new strategic partnership with India and enhanced bilateral cooperation in technology, security, education, and climate change underscores his ambition to elevate relations with one of the world’s fastest-growing economies.

But the UK’s insistence on lowering tariffs, which can be as high as 150% on key exports like food and automobiles, remains a sticking point in the trade deal talks. Additionally, issues regarding the UK’s immigration policies, particularly concerning Indian service sector workers, continue to challenge the negotiations.

In response, India has raised concerns about proposed UK regulations, such as the carbon tax akin to the EU’s carbon border adjustment mechanism, which could potentially undermine the tariff concessions agreed upon in the FTA.

Recent virtual meetings between Indian and UK officials in May aimed to restart discussions, focusing on economic assessments and the inclusion of new disciplines like environment, labour, gender issues, and digital trade in the agreement.

India, currently engaged in FTA negotiations with several other nations and unions including the EU, Australia, Eurasian Economic Union, and Peru, remains committed to advancing its global trade interests despite the challenges posed by the stalled talks with the UK.

As both countries navigate their post-election landscapes, the future of the India-UK FTA remains uncertain, contingent upon resolving key issues.

What are we expecting in terms of turnout this year relative to the past few elections? And historically, is there a statistical relationship in the U.K. between turnout and the prospects for the incumbent?

I don’t know of any relationship between turnout and incumbency. On balance, we would expect turnout, I think, to be low this time. There are two things that tend to militate in favour of a low turnout. One is people thinking that it’s a foregone conclusion. And everyone is convinced that Labour is going to win. And the second is when people have a sense that there is not that much difference between the big two parties. That tends to drive turnout down as well. Now, it’s very hard to predict because the counterargument is there’s so much anger against the Conservative Party that people who don’t normally vote will go out to register their discontent. So we are never certain until the day but there are reasons for thinking that turnout will be low.

Prime Minister Rishi Sunak has the worst approval ratings, according to some polls, since 1979. He has promised to not jump ship and move back to California. How does Mr. Sunak’s political future look if he loses his own seat?

I think the cynical approach to that question will be to say he might be quietly relieved if he loses his seat because then he does not have to honour his pledge to stay in Parliament for the next five years. Most people I have spoken to seem to think it’s very, very unlikely that if he wins his seat, he will stay in Parliament, or if he does stay in Parliament that he will attend Parliament very often at all. But we will have to wait and see. But of course, if he does lose his seat, then he spared that difficult decision.

If he wins his seat, it’s unlikely he will attend Parliament?

I just think for a former Prime Minister who has lost in humiliating circumstances, who then has to sit around — while his party picks a new leader, and the candidates will queue up to say why he was wrong in what he did — it will not be the most comfortable work environment to be in.

How do you think the Conservative Party is going to look, post-Sunak?

The simple and rather disappointing answer is: we don’t know. And we don’t know largely because we’re not sure how many MPs are going to be left in Parliament…And remember, it’s the MPs who choose the two candidates [for party leader] who go to the ballot of members.

Is Nigel Farage’s Reform U.K. party here to stay? Are they going to be a consistent force competing for votes with the conservatives? How is their support spread across the U.K.? [Nigel Farage was one of the leaders of the Brexit campaign and is currently not an MP].

One of the trends we saw before the Brexit referendum was a steady decline in the vote share of the two big parties — Labour and Conservative. And UKIP, which was a forerunner of Reform, was one of the beneficiaries of that. So in 2015, UKIP got almost four million votes. We will see if Reform does better than that four million votes or not. But it does seem to me that this is going to be another election where the vote share of the two big parties is going to drop and where other parties are going to do well. So, I think Reform is here to stay. Unless, and this will depend on a lot of things we can’t predict it is conceivable, there’s been a lot of talk about the fact that if Nigel Farage wins a seat in Parliament, he might consider jumping ship to the Conservatives because he wants to be a Conservative rather than in Reform because the Conservatives are a bigger brand, better databases, better voter tracking and things like that. Now, a lot of politicians in the Conservative Party have come out and said that Nigel Farage cannot join the Conservatives. Again, we’ll have to wait and see what the Conservatives look like after the election. It is conceivable, just about, that Reform get a bigger share of the vote than the Conservative Party, though, because the Reform vote is pretty evenly spread across the country, they’re not going to get many MPs at all.

David Lammy, Labour’s shadow foreign secretary, has recently said an FTA (‘free’ trade agreement) is the floor, not the ceiling, of a relationship with India. Labour is also looking to reset its relationship with India. Some of that has already started. The Indian High Commissioner also recently said that asking for visas is not India’s number one priority in the FTA context. Will Keir Starmer have more bandwidth to negotiate a free trade agreement with India because his hands are less tied in terms of migration and perhaps he has less to prove in terms of exercising post-Brexit freedoms?

It’s interesting on immigration because, on the one hand, Labour has continued to talk tough: they are going to reduce numbers, they are going to stop so many immigrants coming in by improving training for British workers and things like that…But on the other hand, Labour voters are not concerned about immigration. Immigration is not a top concern for Labour voters. And it looks like Labour is going to have the unexpected presence of coming into office and seeing a significant fall in immigration numbers because of the decisions taken by the current government. So it might be that that gives Labour a little bit more freedom than their predecessors to talk about a deal with the Indians, including visas, because it might not be the top requirement, but it’s certainly an important requirement for the Government of India. So it could be that Labour sees an opportunity to be a bit more flexible.

There’s a political rationale for some of this. I am not doubting for a moment that they are genuinely interested in strengthening this strategic partnership with India, but Labour has been in recent times, struggling to keep hold of Indian Hindu voters who have been tending to turn their backs on the party. And I am sure that party strategists who say whatever the foreign policy benefits are, and there are several, of a good relationship with India, and there are political dividends to be had as well.

The Conservative manifesto seems to have more detail on the relationship with China. Is that because they have the advantage of having been in office for 14 years? Are you seeing any major shifts in the U.K.’s China policy; the Labour manifesto sounded fairly high level on its China policy.

I think on the Tories, there are three things. One, yes, they have been in government and have had to try to address some of these questions, too. Two, there is a very strong strand of opinion inside the Conservative Party that wants to see us be tougher on China. And I think that was reflected in the manifesto. And three, if I can suggest something as cynical as this, it’s easier to promise things if you are pretty convinced you are going to lose.

Labour, you’re absolutely right it’s very, very, vague. Cooperate and compete where we can or where we have to…it’s intensely vague. And I do think it’s the case that Labour has not even begun to confront, in their manifesto, at least [we don’t know in that private thinking], some of the difficult trade-offs that are going to be in the relationship with China. Because, on the one hand, the priority of Kier Starmer is growth, and having flourishing trade with China might be part of that strategy. On the other hand, opinions in this country on China have hardened notably over the last five or six years. I think the U.K will come under significant pressure from the U.S., whoever is in the White House, to take a tougher line on China. So that I think is an issue where we’ll learn as we go what Labour intends to do.

Do you think we are going to be in a position where we can seriously be talking about the U.K. returning to the EU, in some sense, in a few years?

At the moment, I would say there is very little prospect of that. But there are a lot of moving parts. Let’s see how big the Labour majority is; and how bad the conservative defeat is. You can look in terms of Labour being in power for the foreseeable future, I think they might be willing to take more ambitious steps towards the European Union, perhaps at the end of the first term, or towards the second term. The problem for Labour is they need to score some successes quite quickly. And a lengthy negotiation with the EU leading to, ultimately, a closer economic relationship, is not going to give you those quick wins. So I think it is conceivable I mean… anything’s conceivable in British politics these days… but I don’t think it’s for the first term of a Labour government.

Keir Starmer has been criticised for his positions on Israel and Gaza [for example in October 2023 he had implied that Israel had a right to withhold water and power from Palestinians while also saying Israel had to act within the bounds of international law]. Once the elections are done, are we going to see any shifts from Keir Starmer and the Labour Party in terms of Israel and Gaza?

It’s very hard to know, on both Israel and Gaza and Europe. What will be interesting is that the government will face significant pressure from its own side, to move further and faster than they have seemed willing to do today. One of the things we don’t know is how well the leadership will cope with those pressures, whether they will succumb to them, whether they will stand up to them. Those are things we simply don’t know until we see the new government in action. I would say that whilst I think Kier Starmer misspoke in the LBC interview about whether Israel was respecting international law, so I think he probably went further than he intended. I would hazard a guess he was not that upset about it afterwards, because at that point, the key message from Labour’s leadership is, “We have changed”… And there are a few clearer ways of doing that than turning your back on some of these pillars of Labour policy.

London:

British Prime Minister Rishi Sunak could face some transparency questions related to wife Akshata Murty’s Infosys shares, worth an estimated 500 million pounds, in a proposed free trade agreement (FTA) with India, according to a media report.

‘The Observer’ claims the Opposition Labour Party and trade experts are questioning the full financial impact as Infosys, the Bengaluru-headquartered software service major co-founded by Akshata’s father Narayana Murthy, stands to benefit from any such trade deal.

India and the UK have been negotiating an FTA, now in its 12th round of negotiations, as Mr Sunak prepares for his first visit to India as British Prime Minister for the G20 Leaders’ Summit next month.

“As the Prime Minister recently learned, it’s important he declares any interests properly. I expect him to do so in respect of the India trade deal too,” said Darren Jones, Labour MP and chair of the cross-party House of Commons Business and Trade Select Committee – which has been scrutinising the FTA talks.

Earlier this week, the UK parliamentary watchdog released its report into an inquiry concluding that Mr Sunak had inadvertently failed to correctly declare his wife’s shares in childminding firm Koru Kids that stood to benefit from the government’s budget policy. The 43-year-old British Indian leader apologised for the “inadvertent” breach that arose “out of confusion”, and the matter was closed.

According to the ‘Observer’ report, Infosys – which has had contracts with the British government as well as many UK companies – is known to want to improve access to the UK for its thousands of contract workers through changes to the visa regime. Allowing more visas for its workers in sectors such as IT and artificial intelligence (AI) is claimed to be a “key Indian demand in the talks”.

The newspaper claims that the Foreign, Commonwealth and Development Office (FCDO) has even warned the Business and Trade Select Committee against conducting a trip to India in the coming months to examine issues around a potential deal.

“The committee was advised by the government that it would be better to visit India next year instead of during sensitive trade negotiations,” committee chair Jones told the newspaper.

Shadow trade secretary Nick Thomas-Symonds said while his party backed a trade deal with India, it is important that Mr Sunak is “transparent about any relevant business links and his personal role in negotiations”.

Alan Manning, a professor of economics at the London School of Economics, told the newspaper that because software services are one of India’s biggest export sectors, India will naturally be looking for opportunities to grow them in their trade deals.

“As the Prime Minister’s family may have a direct financial interest in any deal on immigration, he should recuse himself from this part of the negotiations to avoid any perception of conflict of interest,” said Manning.

Meanwhile, The Sunday Times reports that India is prepared to cut tariffs on Scotch whisky and British cars and parts by at least a third if the UK is prepared to slash its workers’ tax to clinch an FTA.

According to reports, New Delhi is pushing London to sign a social security agreement similar to deals it has signed with countries, including Canada, Australia and France, that could exempt Indian workers from social security contributions if they continue to make payments in India.

“The social security agreement is a very important thing for us. It creates a lot of ill will if folks have to surrender a significant amount of their savings,” the newspaper quoted an Indian source as saying.

The reports come as UK Business and Trade Secretary Kemi Badenoch held bilateral talks with her counterpart, Piyush Goyal, in India during a visit for a G20 trade meet this week. Goyal said they discussed ways to “add further momentum” to the India-UK FTA negotiations for a “mutually beneficial deal”. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

London:

British Prime Minister Rishi Sunak could face some transparency questions related to wife Akshata Murty’s Infosys shares, worth an estimated 500 million pounds, in a proposed free trade agreement (FTA) with India, according to a media report.

‘The Observer’ claims the Opposition Labour Party and trade experts are questioning the full financial impact as Infosys, the Bengaluru-headquartered software service major co-founded by Akshata’s father Narayana Murthy, stands to benefit from any such trade deal.

India and the UK have been negotiating an FTA, now in its 12th round of negotiations, as Mr Sunak prepares for his first visit to India as British Prime Minister for the G20 Leaders’ Summit next month.

“As the Prime Minister recently learned, it’s important he declares any interests properly. I expect him to do so in respect of the India trade deal too,” said Darren Jones, Labour MP and chair of the cross-party House of Commons Business and Trade Select Committee – which has been scrutinising the FTA talks.

Earlier this week, the UK parliamentary watchdog released its report into an inquiry concluding that Mr Sunak had inadvertently failed to correctly declare his wife’s shares in childminding firm Koru Kids that stood to benefit from the government’s budget policy. The 43-year-old British Indian leader apologised for the “inadvertent” breach that arose “out of confusion”, and the matter was closed.

According to the ‘Observer’ report, Infosys – which has had contracts with the British government as well as many UK companies – is known to want to improve access to the UK for its thousands of contract workers through changes to the visa regime. Allowing more visas for its workers in sectors such as IT and artificial intelligence (AI) is claimed to be a “key Indian demand in the talks”.

The newspaper claims that the Foreign, Commonwealth and Development Office (FCDO) has even warned the Business and Trade Select Committee against conducting a trip to India in the coming months to examine issues around a potential deal.

“The committee was advised by the government that it would be better to visit India next year instead of during sensitive trade negotiations,” committee chair Jones told the newspaper.

Shadow trade secretary Nick Thomas-Symonds said while his party backed a trade deal with India, it is important that Mr Sunak is “transparent about any relevant business links and his personal role in negotiations”.

Alan Manning, a professor of economics at the London School of Economics, told the newspaper that because software services are one of India’s biggest export sectors, India will naturally be looking for opportunities to grow them in their trade deals.

“As the Prime Minister’s family may have a direct financial interest in any deal on immigration, he should recuse himself from this part of the negotiations to avoid any perception of conflict of interest,” said Manning.

Meanwhile, The Sunday Times reports that India is prepared to cut tariffs on Scotch whisky and British cars and parts by at least a third if the UK is prepared to slash its workers’ tax to clinch an FTA.

According to reports, New Delhi is pushing London to sign a social security agreement similar to deals it has signed with countries, including Canada, Australia and France, that could exempt Indian workers from social security contributions if they continue to make payments in India.

“The social security agreement is a very important thing for us. It creates a lot of ill will if folks have to surrender a significant amount of their savings,” the newspaper quoted an Indian source as saying.

The reports come as UK Business and Trade Secretary Kemi Badenoch held bilateral talks with her counterpart, Piyush Goyal, in India during a visit for a G20 trade meet this week. Goyal said they discussed ways to “add further momentum” to the India-UK FTA negotiations for a “mutually beneficial deal”. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)