After more than three and a half years of rigorous negotiations, India and the United Kingdom have officially concluded talks on a comprehensive Free Trade Agreement (FTA). The deal is poised to significantly strengthen strategic and economic ties between the world’s fifth- and sixth-largest economies. Its announcement comes at a time when global trade is being reshaped by geopolitical tensions and protectionist trends.
Once implemented, the FTA is expected to make it cheaper for Indian consumers to import a range of goods including whisky, gin, automobiles, medical devices, electrical machinery, cosmetics, soft drinks, chocolates, and lamb. In return, Indian exports in sectors such as textiles, leather goods, toys, marine products, footwear, and gems and jewellery will become more competitive in the UK market due to tariff reductions and improved market access. To protect its domestic agricultural sector, India has excluded sensitive items such as dairy products, apples, and cheese from any duty concessions.
A major highlight of the deal is the finalisation of a long-pending social security pact. This agreement grants Indian skilled professionals working in the UK a three-year exemption from mandatory social security contributions—a long-standing demand from India. The move is expected to benefit over 60,000 workers in the IT sector alone and result in savings of up to 20% of their salaries. Overall, Indian employees and companies are projected to save more than ₹4,000 crore as a result of this provision.
The FTA and social security agreement are now subject to legal review and approval by both governments before being formally signed. For the UK, this deal is being hailed as the most significant and economically meaningful trade agreement since leaving the European Union. For India, it represents the most comprehensive pact it has ever signed with a major developed economy. The timing is also notable, as discussions are gaining traction for an early-stage trade agreement between India and the United States. Under the terms of the deal, the UK will eliminate tariffs on approximately 99% of Indian goods, covering nearly all current trade value. India, in turn, will reduce tariffs on 90% of its tariff lines, with 85% of them becoming entirely duty-free within ten years.
However, trade experts have cautioned about one key unresolved issue. Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), warned that the deal’s balance may be threatened by the UK’s proposed Carbon Border Adjustment Mechanism (CBAM). “If Indian exports face CBAM levies while UK goods enter India duty-free, this could turn a balanced agreement into a one-sided deal.