India and UK Ink Free Trade Agreement During Modi’s Visit to London
On 24 July 2025, India and UK signed the Free Trade Agreement (#FTA) — called the Comprehensive Economic Trade Agreement (CETA) — during Indian PM Narendra Modi’s visit to UK. Concurrently, both sides unveiled the new strategic cooperation plan entitled India-UK Vision 2035, which supersedes the earlier India-UK Roadmap 2030. As a result of #CETA, the bilateral trade volume is projected to double from USD 56 billion in 2024 to USD 112 billion by 2030.
The key measures in the agreement are as follows:
- Remove customs duty on 99% tariff lines for imports to UK and 90% of tariff lines for imports to India
- Increase Indian export of leather and footwear by nearly $1B
- Double Indian jewelry and gem exports within 2-3 years
- Increase export of Indian agricultural products by 20% within 3 years
- Exempt 75,000 Indian workers in UK from social security contributions for first 3 years
- Allow Indian professionals to work in 35 UK sectors for 2 years without a UK office
As par the usual process in the UK, the #CETA will need to be debated and ratified by both the House of Commons and House of Lords before taking effect. A Select Committee on the CETA is also likely to be set up. The whole process is expected to be completed within a year. The Indian Government indicated that it will use this time window to shore up the capacity of Indian manufacturers and exporters.
In India, the Union Cabinet has already approved the deal and there is no need to secure approval from the lower and upper house, known as the Lok Sabha and the Rajya Sabha respectively. The labor-intensive industries in India such as textile & garment, leather & footwear, gems & jewelry are expected to reap the most benefits from the CETA.
On the other hand, Indian consumers might expect to pay less for premium scotch whisky and luxury British cars. However, the big deal between UK and India is an order for Airbus planes worth GBP 5 billion. As British firm Rolls Royce has been earmarked as the supplier of the engines, it will significantly benefit the UK economy as jet engines are quite complex products that make up a sizeable portion of the cost of a plane.
| No. | Firm | Deal | Amount GBP M |
|---|---|---|---|
| 1 | Airbus & Rolls Royce | Passenger Aircrafts and Jet Engines | 5,000 |
| 2 | Occuity | Ophthalmic Devices | 75 |
| 3 | Marcus Evans Group | Business Intel and Events Management | 69 |
| 4 | Johnson Matthey | Specialty Chemicals | 20 |
| 5 | Carbon Clean | Carbon Capture | 8 |
| 6 | DCube | Indian AI Startup to set up offices UK | 5 |
It took three and a half years of negotiations and a change of government in the UK to arrive at this signature. After the UK Labor Party took office ten months ago, UK Trade Secretary Jonathan Reynolds resumed the talks with his Indian counterpart, the Indian Minister of Commerce, Piyush Goyal. The rapport between the two protagonists was central to sealing the deal in record time.
As part of the CETA, Indian has opened up its public procurement to UK firms as long as they meet some local content threshold. However, critics point out that this opening goes against the ‘Make In India’ policy, meant to upgrade and favor local manufacturing. From the preliminary information, it would appeart that most UK firms, with only 20% local content, will be treated at par with Class 2 Local Suppliers.
From a regional perspective, a feasibility study conducted on the Indian side highlighted which product categories from which states stand to benefit from the CETA.
