What happened?
On 6 May 2025, India and the United Kingdom announced the successful conclusion of a Free Trade Agreement (FTA). The announcement was made by Prime Minister Narendra Modi and UK Prime Minister Keir Starmer. The agreement followed discussions at the G-20 Summit in Rio de Janeiro in November 2024 and intensified negotiations from February 2025, led by Commerce and Industry Minister Piyush Goyal and UK Secretary of State Jonathan Reynolds. A significant component of the agreement is a Double Contribution Convention, granting a three-year exemption from UK social security contributions for Indian employees working temporarily in the UK.
Why it matters to India
The India-UK Free Trade Agreement is a landmark achievement aligned with India’s long-term economic vision, Viksit Bharat 2047. It is set to provide substantial benefits, with nearly 99% of Indian exports to the UK gaining zero-duty access, covering almost the entire trade value. This will significantly boost India’s manufacturing and export-oriented sectors, particularly labour-intensive industries such as textiles, leather, and gems and jewellery, as well as engineering goods and chemicals, enhancing their competitiveness. The FTA is also expected to create considerable employment opportunities in India. For the services sector, the agreement opens new avenues in IT/ITeS, financial services, and various professional services, further supported by commitments on digitally delivered services. A key gain for India is the three-year exemption from social security contributions for Indian professionals working temporarily in the UK, which will enhance the competitiveness of Indian service providers and benefit many Indian workers. The agreement also facilitates easier mobility for a range of Indian professionals and addresses non-tariff barriers, promoting smoother trade flows and regulatory transparency. Overall, this FTA is anticipated to deepen India’s global economic integration and foster sustainable growth.