India and the United Kingdom finalised a long-awaited Free Trade Agreement on Monday after three years of negotiations, a deal that is expected to boost bilateral trade by ₹60,000 crore annually and create 200,000 new jobs across pharmaceuticals, textiles, software services, and food processing.
The agreement, signed in London by Commerce Minister Piyush Goyal and UK Trade Secretary Liam Byrne, slashes tariffs on 85% of Indian goods entering the UK—including apparel, leather, gems, jewellery, and engineering products—to zero within three years. In return, India has agreed to cut duties on 90% of UK goods, including whisky (reduced from 150% to 75% immediately, then zero over seven years), automobiles, and high-end medical devices.
The deal includes India’s first comprehensive services chapter, allowing easier movement of Indian IT professionals and students to the UK with fast-track visas. UK-origin graduates will be granted 3-year post-study work visas, addressing a key concern that had stalled talks in 2023.
Prime Minister Modi called the agreement ‘a historic milestone that reflects the deep ties between our two democracies,’ while UK Prime Minister Keir Starmer said it was ‘the biggest trade deal Britain has struck since Brexit and a blueprint for our economic future.’
Analysts expect the biggest gainers to be Indian pharmaceutical companies, which currently face a £200 million average annual tariff burden; textile exporters from Gujarat and Tamil Nadu; and the $10 billion Indian IT industry, which counts UK financial services as a major client base.
The deal is expected to be ratified by both parliaments within six months and come into force by January 2027.
