India–United Kingdom Comprehensive Economic and Trade Agreement
Proposed free trade agreement between India and the United Kingdom
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The India–United Kingdom Comprehensive Economic and Trade Agreement, also referred to as the India–United Kingdom Free Trade Agreement, is a free trade agreement between India and the United Kingdom. The negotiations were initiated in January 2022.[1] It is the second comprehensive free trade agreement that India had concluded with a European country, after EFTA; it is the third free trade agreement signed by the United Kingdom since leaving the European Union negotiated completely anew.[2]
| Comprehensive Economic and Trade Agreement between the Republic of India and the United Kingdom of Great Britain and Northern Ireland | |
|---|---|
The prime ministers and trade representatives of India and the UK during the formal ceremony of the treaty's signing. | |
| Type | Free trade agreement and Economic Integration Agreement |
| Context | Trade agreement between India and the United Kingdom |
| Drafted | 6 May 2025 |
| Signed | 24 July 2025 |
| Location | Chequers, Aylesbury, Buckinghamshire, England, United Kingdom |
| Negotiators |
|
| Signatories | |
| Parties | |
| Language | English |
India and the United Kingdom concluded negotiations for an agreement in principle on 6 May 2025.[3]
The agreement was signed by the two countries on 24 July 2025.[4][5]
Negotiations
| Round | Dates | Location | Ref. |
|---|---|---|---|
| 1 | 17–28 January 2022 | Virtual meeting | [6] |
| 2 | 7–17 March 2022 | London | [7] |
| 3 | 25 April–6 May 2022 | New Delhi | [8] |
| 4 | 13–24 June 2022 | London | [9] |
| 5 | 18–29 July 2022 | New Delhi | [10] |
| 6 | 12–16 December 2022 | New Delhi | [11] |
| 7 | 6–10 February 2023 | London | [12] |
| 8 | 20–31 March 2023 | New Delhi | [13] |
| 9 | 24–28 April 2023 | London | [13] |
| 10 | 5–9 June 2023 | New Delhi | [14] |
| 11 | 5–14 July 2023 | London | [15] |
| 12 | 8–31 August 2023 | New Delhi | [16] |
| 13 | 18 September–15 December 2023 | London, New Delhi | [17] |
| 14 | 10 January–15 March 2024 | London, New Delhi | [18][19] |
| 15 | 24 February 2025–6 May 2025 | New Delhi | [20][3] |
In May 2021, British Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi agreed deeper trade co-operation between the two countries.[21] This “Enhanced Trade Partnership” removed a number of trade barriers and set out the two countries’ intention to work towards a free trade agreement.[22]
India and the UK launched negotiations in January 2022.[23] Johnson declared that the agreement should be completed by Diwali 2022.[24][25] Despite this, in October 2022, the Secretary of State for International Trade, Kemi Badenoch, said that the Government was no longer working to this deadline.[26] She stated that the Government wanted “to focus on the quality of the deal rather than the speed of the deal”.[27]
By December 2023, the UK and India had reached the 13th round of negotiations, deciding to fast track the agreement in order to complete prior to the elections in both countries the following year.[2] Negotiations between both countries are locked in several issues, one of which is the UK's concerns about agreeing to visas for professionals demanded by India.[28] The thirteenth round of negotiations concluded on 18 December 2023.[17]
The fourteenth round of negotiations began on 10 January 2024.[18] India had been pushing to include social security payments for Indian workers in the UK, Badenoch is reportedly “keen to avoid” this.[29] In March, UK Negotiators flew to India in a “last-gasp attempt to clinch an FTA before the Indian election campaign pauses talks”, according to a UK government official, adding that India believes “they will get more out of Labour on visas and social security”.[30] Shadow Secretary of State for Business and Trade Jonathan Reynolds and Shadow Foreign Secretary David Lammy visited India the month prior to talk with Indian officials.[31] The UK is asking for access in India's government procurement as well as signing a bilateral investment treaty before concluding the FTA.[32] Some British trade officials are increasingly pessimistic about the India deal and see a free trade agreement with the Gulf Cooperation Council as a more realistic deal which can be struck prior to the next election.[30] The fourteenth round of negotiations remain open without a breakthrough on major outstanding issues between the two countries, India became primarily focused on their upcoming general election.[33] Badenoch stated that she would not use the Indian elections as a deadline, just prior to India signing a free trade agreement with the European Free Trade Association, whose members include Iceland, Liechtenstein, Norway, and Switzerland.[34] On 12 March, Modi and British Prime Minister Rishi Sunak agreed to work for an early conclusion of the free trade agreement, during a phone call.[35][36]
On 15 March, it was announced that negotiations will be "put on ice" until spring after India's election concludes.[19][37] At the beginning of April, the Indian Ministry of Commerce and Industry placed the completion of India–UK FTA as their priority for 100-day agenda after a new government takes charge.[38] Despite the fourteenth round being declared the prior month, the round remained open by request of India in April 2024; India demanded an exemption from the UK's planned carbon tax, as well as concessions on visas for Indian workers and, a social security agreement.[39] On 28 May, a high-ranking British delegation had abruptly cancelled its scheduled visit to New Delhi, due to the snap election announcement in the UK a few days prior.[40]
By Spring 2024, the majority of the 26 chapters in the FTA, which include goods, services, investments and intellectual property rights were completed; the remainder of the unresolved issues were rules of origin, duty concessions on electric vehicles, Scotch whisky, social security agreement, carbon border tax, and liberalisation of financial services, in addition to a separate bilateral investment treaty.[41]
Following Modi's re-election on 4 June, which was received positively by UK-based strategic experts and poll watchers, Modi maintained his party's stated objective to conclude the UK-India FTA negotiations within those first 100 days.[42] India had to wait until 4 July for the conclusion of the British general election, in order to resume negotiations for the FTA.[43] On 14 June, Modi and Sunak reaffirmed their commitment to concluding the free trade agreement at a bilateral meeting during the 50th G7 summit.[44][45] Upon the election of Sir Keir Starmer as British Prime Minister, the two leaders agreed to work towards early conclusion of a mutually beneficial FTA during a phone call.[46] During a visit to New Delhi in late July, Foreign Secretary David Lammy and Modi committed to an early conclusion for the FTA under the Starmer government.[47]
At the 2024 G20 Rio de Janeiro summit, Starmer and Modi agreed to relaunch negotiations for an FTA in early 2025, Starmer also proposed upgrading bilateral relations by seeking a new Strategic Partnership covering energy and security.[48] FTA talks were relaunched on 14 January 2025.[49][50] On 9 April 2025, Chancellor Rachel Reeves and Finance Minister Nirmala Sitharaman announced that 90% of the trade agreement had been completed, including mobility visas for Indian workers which had been one of the most contentious negotiation issues; the outstanding issues related to whisky, cars, and pharmaceuticals.[51] It was reported on 27 April 2025, that India had watered down its original requests in regards to visas.[52] On 29 April 2025, Piyush Goyal declared that “25 of 26 matters have been agreed.”[53] On 6 May 2025, Prime Minister Modi announced that an agreement had been reached between India and the United Kingdom.[54][3]
Impact
The agreement resulted in a significant boost to bilateral economic relations, with over £1.3 billion in new investments from 64 Indian companies into the United Kingdom. This investment created approximately 6,900 jobs across various UK regions and sectors, including engineering, technology, and the creative industries. The agreement enhanced investor confidence, reduced tariffs on imports between the two countries, and reinforced India's position as the UK's second-largest investor, contributing to domestic economic growth and strengthening UK-India trade ties.[55]
The deal is expected to increase the UK's gross domestic product by £4.8 billion annually and boost bilateral trade with India by an additional £25.5 billion per year by 2040.[56]
Comments
Diageo India CEO, Hina Nagarajan stated that the FTA would be one of the greatest milestones for market access in the alcoholic beverage industry in decades if the 150% duty levied on imported Scotch whisky is reduced.[57]
UK Business and Trade Secretary Peter Kyle stated that India's position as the world's fourth-largest economy presented major opportunities for British businesses, highlighted by billions in investment supporting thousands of UK jobs. He noted that the UK-India trade agreement further strengthened bilateral ties and contributed to economic growth across the UK.[55]
Starmer faced questions regarding India's continued purchase of Russian fossil fuels, stating that he respects India's "strategic independence."[58]
