In a landmark moment for global trade and international relations, the United Kingdom and India today formally inked a comprehensive free trade agreement (FTA), heralded by Prime Minister Keir Starmer as a “major win for Britain.” The signing ceremony, which saw Prime Minister Starmer host his Indian counterpart, Narendra Modi, marks the culmination of extensive negotiations and promises to unlock billions in economic growth, create thousands of jobs, and deepen strategic cooperation across a multitude of sectors. This historic agreement was officially announced by the Prime Minister’s Office, 10 Downing Street, and the Department for Business and Trade.

The deal, projected to inject an additional £4.8 billion into the UK’s Gross Domestic Product (GDP) annually and deliver a collective wage uplift of £2.2 billion for British workers each year, signifies a pivotal step in the UK’s post-Brexit global trade strategy. Beyond the immediate economic dividends, the agreement also reinforces a renewed Comprehensive and Strategic Partnership, solidifying joint efforts on critical global challenges, from climate change and technology security to combating organised crime and illegal migration.

A New Chapter in UK-India Economic Ties

The relationship between the United Kingdom and India stretches back centuries, evolving from colonial ties to a modern partnership rooted in shared democratic values, a vibrant diaspora, and a commitment to multilateralism. As both nations navigate a rapidly changing geopolitical landscape, the imperative to forge stronger economic and strategic alliances has become paramount. For the UK, this FTA represents a cornerstone of its “Indo-Pacific tilt,” a foreign policy reorientation aimed at strengthening ties with fast-growing economies in the region. For India, it offers enhanced access to one of the world’s leading developed markets and a strategic partner in technology and innovation.

Today’s announcement highlights nearly £6 billion in new investment and export wins, directly translating into over 2,200 new British jobs. These roles are concentrated in high-growth sectors, including aerospace, advanced manufacturing, and cutting-edge technology, supporting a diverse workforce of engineers, technicians, and supply chain professionals across the length and breadth of the UK. From the industrial heartlands of the Midlands to the innovation hubs of London and the manufacturing centres of the North, the benefits are designed to be felt in every corner of the nation.

Unlocking Economic Growth: Tariffs Slashed, Opportunities Soar

A central pillar of the new trade agreement is the significant reduction in tariffs on a wide array of goods, making it easier and cheaper for businesses in both countries to trade. India, a market of over 1.4 billion people with a rapidly expanding middle class, has historically maintained higher tariffs on imported goods. Under this new deal, India’s average tariff on UK products will plummet from 15% to a mere 3%. This dramatic reduction is a game-changer for British exporters.

Consider the impact on key British industries:

• Whisky: Perhaps one of the most celebrated wins for UK industry, Scotch whisky producers will see tariffs immediately halved from a prohibitive 150% to 75%. This will further drop to 40% over the next decade. This preferential treatment gives UK whisky a significant competitive edge over rivals in the world’s largest whisky market by volume. Companies like Diageo, with its iconic Johnnie Walker brand, and Chivas Brothers, producers of Chivas Regal and Ballantine’s, stand to gain immensely. As Jean-Etienne Gourgues, Chivas Brothers Chairman and CEO, noted, “India is the world’s biggest whisky market by volume and greater access will be an eventual game changer for the export of our Scotch whisky brands.” This reduction is expected to fuel long-term investment and job creation in Scottish distilleries and bottling plants, bolstering a vital component of the UK’s export economy.
• Automotives: The deal slashes tariffs on UK-manufactured cars from a staggering 110% down to 10% under a quota system. This opens up a substantial market for premium and luxury British car brands, which have previously faced significant price barriers. The reduction will make these vehicles more accessible to India’s burgeoning affluent consumer base, potentially leading to increased sales and production for UK car manufacturers and their extensive supply chains.
• Aerospace: Tariffs as high as 11% on aerospace components and finished products will be reduced to 0%. This is particularly beneficial for the UK, a global leader in aerospace manufacturing and design. The agreement facilitates the export of sophisticated aircraft parts, engines, and related technologies, supporting the highly skilled jobs in regions like Filton (Airbus) and Derby (Rolls-Royce).
• Electrical Machinery: Tariffs on electrical machinery, previously up to 22%, will now be reduced to either 0% or a 50% reduction. This will boost exports of advanced electrical components and machinery, crucial for India’s industrial development and infrastructure projects.
• Medical Devices and Cosmetics: British companies producing a wide range of goods, from life-saving medical devices to popular cosmetic products, will find it significantly easier and cheaper to sell into the Indian market, fostering greater market penetration and consumer choice.

Beyond exports, the liberalisation of tariffs on Indian goods imported into the UK, currently standing at £11 billion, promises benefits for British consumers and businesses alike. Cheaper Indian components and materials could lead to potential savings for UK companies in sectors like advanced manufacturing and luxury goods, ultimately contributing to lower prices and greater choice for consumers on items like clothes, shoes, and food products.

Business and Trade Secretary Jonathan Reynolds underscored this broad impact, stating, “The billions brought to our economy from the trade deal signed today will reach all regions and nations of the UK so working people in every community can feel the benefits.”

Investment Hotbed: Companies Leading the Charge

The £6 billion in new investment and export deals announced today are not just abstract figures; they represent concrete commitments from leading companies, both British and Indian, to expand operations and forge new partnerships. These investments are set to create over 2,200 jobs across the UK, demonstrating the tangible impact of the FTA.

Key Investments and Export Wins Include:

• Airbus & Rolls-Royce: A significant portion of the new business comes from the aerospace giants. Airbus and Rolls-Royce are set to deliver Airbus aircraft—with over half powered by Rolls-Royce engines—to major Indian airlines. These contracts, valued at around £5 billion, are critical for sustaining hundreds of highly skilled jobs at their respective sites in Filton (Airbus wings), Broughton (Airbus wings), and Derby (Rolls-Royce engines). This highlights the UK’s enduring strength in high-value manufacturing and engineering. Tufan Erginbiligic, Rolls-Royce CEO, emphasized the importance of the deal, stating, “These agreements will benefit Rolls-Royce and our customers, paving the way for future aerospace growth in India.”
• Zerowatt Energy: This AI-powered energy intelligence platform is establishing its Global HQ in Leicester, investing £10 million and creating 50 new jobs across Leicester, Manchester, Edinburgh, and London over the next three years. This move underscores the UK’s appeal as a hub for green technology and AI innovation.
• Carbon Clean: A UK leader in carbon capture technology, Carbon Clean has invested £7.6 million in a Global Innovation Centre in Mumbai. This strategic move, projected to contribute £83 million in UK export over five years, will unlock 250 jobs across London, Glasgow, and Huddersfield, alongside 100 jobs in Mumbai. It exemplifies the growing collaboration in sustainable technologies, crucial for addressing global climate challenges.
• DCube AI: This AI and data services company, DCube AI, is investing £5 million in the UK, creating 50 jobs in Manchester and London over the next three years. Their focus on strengthening technology offerings to UK customers highlights the increasing demand for advanced data solutions across industries.
• Occuity: An innovative UK AI healthcare company, Occuity has partnered with Remidio Innovative Solutions Pvt. Ltd., a leading Indian manufacturer, to introduce its cutting-edge ophthalmic screening technologies to India. This partnership, with an export value of £74.3 million over five years, will improve access to non-invasive eye screening, showcasing the UK’s leadership in health tech and its potential to impact public health globally.
• Johnson Matthey: A UK-based leader in chemicals and sustainable technologies, Johnson Matthey has secured over £20 million in recent contracts for process licensing, engineering, and catalyst supply in India. Additionally, the company is investing £4 million in a new plant at Taloja (Maharashtra) and doubling capacity at an existing site in Panki, Uttar Pradesh. These projects are anticipated to create up to 20,000 jobs in India during their construction phase, demonstrating the reciprocal benefits of the trade relationship.
• Marcus Evans Group: This global business intelligence and summits company, Marcus Evans Group, has established a new Global Technology office in Mumbai, serving its 59 offices worldwide. It has confirmed a combined export and outward direct investment (ODI) win of £69 million over the next five years from India, reflecting the growing importance of business services and intelligence in the bilateral relationship.
• LTIMindtree: A global technology consulting and digital solutions company, LTIMindtree plans to expand its London operations by adding over 300 highly skilled jobs and investing £1 million. This includes a state-of-the-art AI innovation studio and showcase lab, cementing London’s role as a global tech hub.
• Aurionpro: This global enterprise technology leader, Aurionpro, is investing over £20 million to launch its UK HQ, creating 150+ high-value jobs across multiple UK locations over three years. Aurionpro will also open AI-powered R&D labs in collaboration with top UK universities, focusing on next-gen transport technology and leading the global Safe Superintelligence (SSI) movement, emphasizing ethical AI development.

These examples underscore the diverse nature of the economic benefits, spanning traditional manufacturing to cutting-edge digital and green technologies, and demonstrating the confidence of both British and Indian businesses in the strengthened partnership.

Beyond Commerce: A Comprehensive Strategic Partnership

The trade deal is merely one facet of a much broader and deeper relationship. Prime Ministers Starmer and Modi also signed a renewed Comprehensive and Strategic Partnership, committing to closer collaboration across critical domains:

• Defence and Security: This partnership will see enhanced joint exercises, intelligence sharing, and potential technology transfers, bolstering both nations’ capabilities and contributing to regional stability in the Indo-Pacific. The UK’s advanced defence manufacturing sector stands to benefit from increased collaboration and procurement opportunities.
• Education and Research: Building on existing strong ties, the agreement aims to facilitate greater student and academic mobility, foster joint research initiatives, and encourage institutional partnerships between universities. This will strengthen human capital development and knowledge exchange, crucial for innovation-driven economies.
• Climate Change and Green Technologies: Both nations are committed to ambitious climate targets. The deal offers unprecedented access for the UK’s clean energy industry to India’s vast procurement market as the country rapidly transitions to renewable energy. This includes opportunities in solar, wind, and nascent technologies like carbon capture and storage, where the UK possesses significant expertise. Collaboration on sustainable solutions is vital for global climate action.
• Technology and Innovation: The renewed partnership builds on the landmark UK-India Technology Security Initiative signed exactly one year ago. This initiative focuses on joint work in telecoms security and unlocking investment across emerging technologies. This includes critical minerals (essential for modern electronics and green technologies), artificial intelligence (AI), quantum computing, health and bio-tech, advanced materials, and semiconductors. The emphasis on securing supply chains and fostering innovation in these strategic areas is crucial for national security and economic resilience in the digital age.

Tackling Shared Challenges: Security and Migration

In a significant move to enhance bilateral security, the UK and India have also agreed to strengthen cooperation in tackling corruption, serious fraud, organised crime, and irregular migration. This will be achieved through enhanced intelligence sharing and operational collaboration between law enforcement agencies.

A groundbreaking new criminal records sharing agreement is set to be finalised, which will facilitate the exchange of criminal records to support criminal proceedings, maintain accurate watchlists, and enable the enforcement of travel bans. These measures represent a robust step forward in joint efforts to combat organised immigration crime, human trafficking, and document fraud, ensuring a more secure and orderly migration system. This aspect of the agreement addresses a key concern for the UK government, demonstrating a commitment to a holistic partnership that extends beyond economic considerations.

Expert Reactions and the Road Ahead

The signing of the UK-India FTA has been met with broad approval from business leaders and trade experts. William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), remarked, “The signing of this agreement is a clear signal of the UK’s continuing commitment to free and fair trade. It will open a new era for our businesses and boost investment between two of the world’s largest economies.” He highlighted new opportunities in transport, travel, creative, and business support sectors, alongside traditional strengths in finance and professional services.

The deal’s long-term projections are ambitious:

• Increase UK exports to India by nearly 60% in the long run, equivalent to an additional £15.7 billion of UK exports to India when applied to projections of future trade in 2040.
• Increase bilateral trade by nearly 39% in the long run, equivalent to £25.5 billion a year, when compared to 2040 projected levels of trade in the absence of an agreement.

While the immediate benefits are clear, the true success of the agreement will depend on its effective implementation and the willingness of businesses to seize the new opportunities. The next steps involve the ratification process, which requires parliamentary approval in both countries. Business leaders, like Jean-Etienne Gourgues of Chivas Brothers, are keen for swift ratification “so business can get to work implementing the deal!”

The UK-India FTA is more than just a trade agreement; it is a strategic partnership that reflects the evolving global economic and geopolitical landscape. It underscores a mutual commitment to open markets, shared prosperity, and collaborative solutions to complex challenges. As both nations look to the future, this historic deal lays a robust foundation for deeper engagement and a new era of growth and cooperation.

Ready to take your career to the next level? Join our dynamic courses: ACCA, HESI A2, ATI TEAS 7 , HESI EXIT  , NCLEX – RN and NCLEX – PN, Financial Literacy!🌟 Dive into a world of opportunities and empower yourself for success. Explore more at Serrari Ed and start your exciting journey today! ✨

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

25th July, 2025