India and the UK signed a landmark free trade agreement (FTA) on Thursday that will eliminate tariffs on 99 percent of Indian exports, open new markets for British whisky and automobiles, and create thousands of jobs in both countries.

Prime Minister Narendra Modi and his UK counterpart, Keir Starmer, attended the signing ceremony, hailing the agreement as a game-changing step toward improving trade, creating jobs, and stimulating economic growth.

Key Highlights

• India–UK FTA signed at Chequers to cut tariffs and boost bilateral trade by $34B annually.
• Agreement grants duty-free access to 99% Indian exports; UK imports face average tariff cut to 3%.

After three years of negotiations, the agreement—officially known as the Comprehensive Economic and Trade Agreement, or CETA—was signed in May. It coincides with changing global trade dynamics brought on by protectionist policies of US President Donald Trump.

Lowering tariffs on important exports like basmati rice, millets, cotton, fruits, vegetables, spices, tea, and coffee would give Indian farmers preferential access to the $37.5 billion agricultural market in the UK.Indian dairy, vegetables, apples, cooking oils, and oats are still protected, while the UK's $5.4 billion seafood market will open with no duties rather than 20%.

India's largest strategic partnership to date and Britain's largest trade deal since Brexit in 2020, the deal was signed by UK Commerce and Industry Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds.

PM Narendra Modi referred to the agreement as "more than just an economic partnership; it is a blueprint for shared prosperity," while Starmer emphasized its potential to provide "huge benefits" by making trade cheaper, faster, and more efficient.

Bilateral trade between the two countries is currently valued at nearly $56 billion, with plans to double that figure by 2030. According to Goyal, the CETA ensures duty-free access for 99 percent of India's exports to the UK, potentially opening up $23 billion in new opportunities. Textiles, marine products, leather, footwear, gems, jewelry, and engineering goods will benefit from zero tariffs, a reduction from previous rates ranging from 4% to 16%. The UK benefits from lower duties on clothing, footwear, tea, seafood, and coffee.

By expediting visa procedures, the agreement also increases mobility for Indian professionals, including engineers, architects, chefs, and IT specialists. It also gives Indian MSMEs, startups, and service providers in the fields of IT, finance, law, and education opportunities.

Interestingly, Scotch whisky tariffs will drop from 150 percent to 75 percent right away, and then to 40 percent over a ten-year period. India will also reduce duties on UK cars from more than 100% to 10% under a phased quota system, while Indian manufacturers will gain access to the UK's electric and hybrid vehicle markets via a quota system.

Also Read: PM Modi and Keir Starmer Set to Sign $34 Bn India-UK Free Trade Deal

The deal also benefits the aerospace sector by eliminating import duties on components, which is expected to support major contracts with companies such as Airbus and Rolls-Royce. With the UK already importing £11 billion in Indian goods each year, the liberalized tariffs are expected to make Indian products more affordable for British consumers while increasing export opportunities for Indian businesses, according to a statement issued prior to the agreement.