India-UK multi-billion-pound Free Trade Agreement explained: All you want to know in top 15 points

India and the United Kingdom have finalised a historic multi-billion-pound free trade agreement on Tuesday, ensuring reductions across 90 per cent of tariff lines. The deal is projected to contribute 4.8 billion pounds ($6.4 billion) yearly to Britain's economy by 2040 while also benefitting India in significant ways.

Following a telephone conversation between Prime Ministers Narendra Modi and Keir Starmer to confirm the Free Trade Agreement (FTA), the deal will undergo legal text formalisation before seeking approval from the British Parliament for implementation.

Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our…

— Narendra Modi (@narendramodi) May 6, 2025

What is a Free Trade Agreement?A free trade agreement is a bilateral or multilateral understanding where participating countries consent to eliminate or lower customs duties on the bulk of traded goods. These agreements also involve reducing non-tariff barriers on substantial imports from partner countries whilst simplifying regulations to enhance services trade and cross-border investments.

Free Trade Agreements offer several strategic benefits to participating countries. They enable zero-duty entry into partner country markets, allowing for greater diversification and expansion of export destinations. By securing preferential treatment over non-FTA member competitors, domestic exporters enjoy a level playing field, especially when other nations have already established similar agreements.

FTAs also act as a magnet for foreign investment, helping stimulate domestic manufacturing. Additionally, they facilitate access to essential raw materials, intermediate products, and capital goods, which are critical for value-added production. Ultimately, these agreements contribute to long-term economic efficiency and enhance consumer welfare.
Currently, more than 350 such trade agreements are operational worldwide, with a majority of countries being signatories to at least one such pact.

India-UK Free Trade Agreement Explained in 15 Points
The India-UK free trade agreement and Double Contribution Convention pact is expected to lead to significant economic benefits for both the countries.

The free trade agreement is projected to enhance bilateral trade by £25.5 billion, whilst boosting UK GDP by £4.8 billion and increasing wages by £2.2 billion annually in the long term. The bilateral trade is expected to reach $120 billion by 2030, doubling from its current $60 billion.

We take a look at 15 important highlights for the proposed FTA between India and the UK:

The trade deal ensures that 99 percent of Indian exports will receive duty-free access to UK markets. India stands to gain substantial advantages from tariff elimination on approximately 99 percent of tariff lines, which covers nearly 100 percent of trade value.

Indian import duties will be reduced substantially, with modifications on 90 percent of tariff lines.

Within ten years, 85 percent of these items will become completely tariff-free.

India will also receive advantages from the UK's FTA commitments in various service sectors, including IT/ITeS, financial, professional, and educational services.

Trade barriers will be eliminated as India agrees to lower tariffs on various products, including whisky, medical devices, advanced machinery, and lamb, enhancing the competitiveness of UK exports.

Additionally, automotive tariffs will be significantly reduced from over 100 percent to 10 percent under a specified quota system.

Import duties on whisky and gin will be reduced from 150 per cent to 75 per cent initially, followed by a further reduction to 40 per cent over a decade of implementation.

The free trade agreement includes lower import duties on various products, benefiting both businesses and Indian consumers. These include cosmetics, aerospace components, lamb, medical equipment, salmon, electrical machinery, soft drinks, chocolate and biscuits.

A significant achievement includes a three-year waiver on social security contributions for Indian workers employed in the UK. The three-year social security contribution waiver for Indian workers temporarily stationed in the UK, along with their employers, under the Double Contribution Convention, will result in considerable cost savings for Indian service providers, strengthening their market position in the UK.

UK consumers may benefit from reduced prices on various items including apparel, shoes, and food items such as frozen prawns as the UK reduces its import tariffs.

The deal substantially enhances service sector trade, encompassing IT/ITeS, financial services, professional services, other business services and educational services.

The agreement creates new export possibilities for sectors requiring a substantial workforce, including textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals.

India obtains crucial assurances regarding digital service delivery, encompassing sectors like architecture, engineering, computing and telecommunications services.

The agreement facilitates easier movement for skilled workers, including Contractual Service Suppliers, Business Visitors, Investors, Intra-Corporate Transferees, family members of transferees with work authorisation, and Independent Professionals such as yoga instructors, musicians and chefs.

India will establish measures to effectively address non-tariff barriers, ensuring unrestricted trade of goods and services whilst preventing unwarranted limitations on its export activities.