New Delhi: In a transformative milestone, India and the United Kingdom have concluded a comprehensive Free Trade Agreement (FTA) and Double Contribution Convention, announced Prime Ministers Narendra Modi and Sir Keir Starmer, heralding a new era of economic cooperation that aligns with India’s Viksit Bharat 2047 vision and promises to double bilateral trade by 2030. This ambitious deal, while poised to drive growth and innovation, faces challenges in ensuring equitable benefits and seamless implementation across diverse sectors.
Finalised on May 6, 2025, the FTA builds on discussions initiated at the G-20 Summit in Rio de Janeiro in November 2024, followed by intense negotiations resuming in February 2025 between India’s Commerce and Industry Minister Piyush Goyal and UK Secretary of State Jonathan Reynolds. Modi, in an X post, described the FTA and Double Contribution Convention as a “historic milestone” that will “deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation.” Starmer, during a telephone conversation with Modi, linked the deal to his Plan for Change, emphasising reduced trade barriers and stronger alliances. Analytically, the FTA’s alignment with both nations’ growth aspirations positions it as a model for modern trade agreements, though its success depends on overcoming regulatory complexities and non-tariff barriers.
Set against a backdrop of USD 60 billion in bilateral trade projected to double by 2030, the FTA is India’s most comprehensive to date, termed a “game changer” by Commerce Secretary Sunil Barthwal for accelerating economic growth and global integration. Goyal, crediting Modi’s visionary leadership, noted that the deal establishes India as a “Vishwa Mitra – Trusted Partner,” benefiting farmers, fishermen, workers, MSMEs, startups, and innovators. The agreement’s scope—covering goods, services, and technology—aims to promote sustainable, inclusive growth, resilient supply chains, and high-quality employment. The projected trade doubling underscores the FTA’s transformative potential, but ensuring benefits reach small-scale producers and MSMEs will require targeted support and infrastructure.
The FTA ensures market access for goods across all sectors, with tariff elimination on 99% of tariff lines, covering nearly 100% of trade value, offering significant opportunities for India’s exports. Key sectors like textiles, marine products, leather, footwear, sports goods, toys, gems and jewellery, engineering goods, auto parts, engines, and organic chemicals will gain competitiveness in the UK market, particularly against non-FTA competitors. It highlights substantial employment gains in labour- and technology-intensive manufacturing, enhancing India’s integration into global value chains. Analytically, this tariff liberalisation could reshape India’s export landscape, but addressing non-tariff barriers, such as UK regulatory standards, will be critical to maximising gains.
In services, the UK offers ambitious commitments in IT/ITeS, financial services, professional services, business services, and education, opening new opportunities for Indian professionals. The FTA eases mobility for Contractual Service Suppliers, Business Visitors, Investors, Intra-Corporate Transferees, their partners and dependent children with work rights, and Independent Professionals like yoga instructors, musicians, and chefs. Significant commitments on digitally delivered services, particularly in architecture, engineering, computer-related services, and telecommunications, position India’s skilled youth to tap the UK’s advanced digital infrastructure. The Double Contribution Convention, exempting Indian workers and employers from UK social security contributions for three years, enhances the competitiveness of Indian service providers, potentially creating jobs and financial gains for thousands. This exemption, as the report suggests, could make Indian IT and professional services more cost-competitive, but sustaining this edge requires reciprocal regulatory transparency.
The FTA addresses non-tariff barriers to ensure the free flow of goods and services, promoting good regulatory practices and transparency in line with India’s ease of doing business reforms. As global innovation hubs, India and the UK aim to strengthen economic cooperation and tackle global challenges, setting a benchmark for fair, ambitious trade agreements. The Comprehensive Strategic Partnership is cemented, with Modi inviting Starmer to India to further ties. Analytically, the FTA’s focus on regulatory alignment could streamline trade, but differing standards and compliance costs may pose implementation challenges, particularly for Indian MSMEs navigating UK markets.
The agreement’s strategic alignment with Viksit Bharat 2047 and the UK’s economic goals positions it as a cornerstone of bilateral ties. By fostering trade, investment, and people-to-people ties, the FTA unlocks potential for joint product and service development for global markets. However, ensuring equitable benefits across India’s diverse economic fabric—especially for rural producers and small enterprises—will demand robust policy coordination and capacity-building. The FTA’s success as a “gold standard” for future deals, as Barthwal noted, hinges on translating its ambitious commitments into tangible outcomes, making it a pivotal step toward India’s emergence as a global economic powerhouse.
– global bihari bureau
