Cabinet clears UK FTA ahead of PM’s London visit; deal text expected this week

By | July 23, 2025
India UK Free Trade Agreement 2025 signing preparations

India has taken a major step toward strengthening global trade ties. On July 22, 2025, the Union Cabinet approved the much-anticipated India–UK Free Trade Agreement (FTA). The formal signing will take place in London on July 24, during Prime Minister Narendra Modi’s state visit. Commerce Minister Piyush Goyal will accompany him.

Strategic Step in India-UK Ties

This agreement, called the Comprehensive Economic and Trade Agreement (CETA), has been under negotiation since 2022. It marks a turning point in bilateral relations. The final legal text is in the last stage of review and will be released this week. The deal reflects a shared vision for deeper economic cooperation between the two countries.

Key Highlights of the FTA

1. Tariff Cuts for Businesses

India will remove tariffs on 99% of UK-bound exports, helping sectors like textiles, machinery, footwear, and food processing.

In exchange, the UK will lower tariffs on 90% of its imports from India. Notably:

  • Scotch whisky tariffs will drop from 150% to 75% initially, then fall to 40% in stages.
  • UK car imports will face reduced duties, from over 100% to just 10%, under a quota system.

These changes aim to make products more affordable and increase trade volume on both sides.

2. Boost to Services Sector

The deal also opens new doors for service professionals. Indian chefs, yoga instructors, IT workers, and artists will benefit from easier visa rules and smoother work access.

Additionally, the agreement promotes mutual recognition of educational qualifications. This move will help more Indian students and professionals build careers in the UK.

3. Social Security Relief

A major highlight is the social security agreement. Indian workers in the UK will no longer need to pay into both Indian and British systems. This will increase take-home pay and reduce costs for employers.

4. Investor Protections

The agreement offers a transparent legal framework for businesses. It includes mechanisms for resolving disputes and protecting investments. These measures are expected to attract more foreign investment from both sides.

What the Deal Means for the Economy

Analysts believe the FTA will double India–UK trade to $120 billion by 2030. This growth will create new jobs and boost exports. The UK is already one of India’s top investors. With the FTA in place, joint ventures are likely to rise in sectors like green energy, health tech, manufacturing, and digital services.

Political Significance

This deal carries weight beyond economics. It enhances India’s standing on the global stage and showcases its ability to form strong post-Brexit trade alliances.

For PM Modi, it strengthens his diplomatic record ahead of elections. Meanwhile, UK Prime Minister Keir Starmer will use the deal to demonstrate the country’s ability to secure high-value global partnerships.

Implementation Timeline

Although the agreement will be signed this week, it won’t take effect immediately. Both countries will need to ratify it in Parliament. This process could extend into 2026.

In the meantime, officials will prepare businesses for the transition. Guidance materials and outreach sessions are planned to help exporters and importers adapt to the new rules.

Industry Reactions

Leaders from key industries have praised the deal.

“This agreement will make Indian exports more competitive,” said Anil Agarwal, Chairman of the India-UK Business Council. “It also gives UK companies better access to Indian consumers.”

Experts agree that the FTA will diversify India’s trade portfolio. It reduces reliance on the US and China and helps Indian firms tap into new global markets.

Conclusion

The Cabinet’s approval of the India–UK Free Trade Agreement marks a bold move in India’s global trade strategy. With signing scheduled during PM Modi’s UK visit, the deal sets the stage for a stronger economic and political partnership. Once implemented, it will open new doors for trade, investment, and cooperation—benefiting businesses, workers, and consumers in both countries.