Prime Minister Narendra Modi landed in London for the fourth time since 2014 on Wednesday evening for a two-day visit to the United Kingdom from July 23 to 24.
One of the most important outcomes of this trip is expected to be the signing of a long-pending free trade agreement (FTA) between India and the UK. Talks on the deal concluded in May after three years of back-and-forth negotiations. Now, both countries are preparing to officially sign the agreement on July 24 in London.
PM Modi is scheduled to hold discussions with UK Prime Minister Keir Starmer on several key areas, including trade, health, energy, education and security. Commerce and Industry Minister Piyush Goyal is accompanying the Prime Minister to formalise the deal.
LANDMARK DEAL AFTER YEARS OF TALKS
The free trade agreement will be India’s first major bilateral trade deal with a developed country in over 10 years. It is also the most important trade deal the UK has signed since leaving the European Union.
The agreement aims to remove or reduce tariffs on a wide range of goods and services. For India, this includes better access for labour-intensive exports such as leather, textiles, clothing and footwear. For the UK, it means cheaper imports of goods like whisky and cars.
According to officials, 99% of Indian products will get duty-free access to the UK market under the agreement, which covers almost all of India’s current exports to Britain. Both countries aim to double their trade value to USD 120 billion by 2030 with the help of this agreement.
NEXT STEPS FOR IMPLEMENTATION
The Indian cabinet has already approved the agreement. Once the commerce ministers from both sides sign the FTA, it will need to be passed by the British Parliament before it comes into effect.
The UK is India’s sixth-largest investor, with total investments of around USD 36 billion. Nearly 1,000 Indian companies operate in the UK, employing over 1,00,000 people and investing about USD 2 billion.
TAX BREAKS AND TRADE BOOST
Besides easing tariffs, the deal also includes a social security agreement. It will allow Indian companies to send employees to the UK without having to make double social security contributions, saving costs for businesses.
India’s exports to the UK rose 12.6% to USD 14.5 billion in 2024-25, while imports grew 2.3% to USD 8.6 billion during the same period. Bilateral trade between the two countries rose to USD 21.34 billion in 2023-24 from USD 20.36 billion in the previous year.
The signing of this deal marks a major moment for both countries. The UK is looking for new trade relationships after Brexit, and India is expanding its global trade footprint.
The FTA is expected to not only improve the trade flow but also strengthen the political and business relations between the two nations.
After the UK leg of his tour, PM Modi is expected to visit the Maldives at the invitation of President Mohamed Muizzu. This part of the visit is seen as a step forward in improving relations between India and the Maldives, which have gone through a rough phase recently.
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