India–UK Seal Free Trade Pact: Impact on Trade, Jobs & Startups

In a historic breakthrough that redefines global economic alliances, India and the United Kingdom have formally concluded negotiations on a comprehensive Free Trade Agreement (FTA), alongside the signing of the Double Contribution Convention. Prime Minister Narendra Modi and UK Prime Minister Sir Keir Starmer described the milestone as a defining moment in the India–UK Comprehensive Strategic Partnership.

This landmark deal, years in the making, is poised to unlock unprecedented economic potential, deepen trade and investment ties, and reshape the bilateral relationship between the fifth- and sixth-largest economies in the world.

Strategic Breakthrough in Bilateral Relations

Prime Ministers Modi and Starmer held a telephone conversation to mark the finalisation of the agreement, which covers trade in goods and services, investment, innovation, and mobility. Both leaders highlighted the FTA as a cornerstone for a modern, future-facing partnership.

“This agreement reflects our shared commitment to inclusive, sustainable economic growth. It creates opportunities not only for major industries, but also for MSMEs, startups, and skilled professionals,” said Prime Minister Modi.

The deal eliminates or significantly reduces tariffs across key sectors, enhances investment frameworks, and facilitates cross-border movement of professionals and students through the accompanying Double Contribution Convention—preventing dual social security payments for employees and employers.

UK’s ‘Plan for Change’ in Action

UK Prime Minister Keir Starmer emphasised the strategic importance of the FTA, calling it a pivotal component of the UK’s post-Brexit “Plan for Change” to bolster global trade alliances.

“This FTA is not just about trade—it’s about a shared vision for the future. It reaffirms our global role and marks a new chapter in UK-India ties, built on trust, mutual benefit, and shared goals,” said Starmer.

The FTA is expected to propel bilateral trade beyond the current $20 billion mark, creating new market access across sectors such as clean energy, fintech, defence manufacturing, pharmaceuticals, and digital services.

Industry Leaders Welcome Transformational Pact

The signing of the FTA and Double Contribution Convention has drawn strong praise from Indian industry bodies, which have termed the agreement “transformational” and “forward-looking”.

Harsha Vardhan Agarwal, President, FICCI, said:

“The India-UK Free Trade Agreement is not just a trade pact—it is a bridge to shared prosperity. It energises sectors such as FMCG, healthcare, and innovation-led enterprises. It’s a testament to India’s growing stature as a global economic force under the bold leadership of Prime Minister Modi.”

Agarwal added that Indian exporters would gain significantly from greater market access in the UK, especially in an uncertain global trade environment. He noted that key demands from Indian industry—including enhanced mobility, streamlined social security contributions, and greater access for Indian products—have been addressed.

Sanjiv Puri, President, CII, described the deal as a timely and strategic boost to the India–UK 2030 Roadmap:

“The FTA reflects a commitment to diversify global supply chains, bolster technology collaboration, and deepen trade. It sets the stage to achieve the ambitious target of USD 100 billion in bilateral trade by 2030.”

Exporters and SMEs to Benefit

The Federation of Indian Export Organisations (FIEO) welcomed the deal as a “game-changer” for Indian trade diplomacy. President S C Ralhan said:

“The agreement provides Indian exporters with preferential access to one of the world’s most consumption-driven markets. It enhances India’s positioning in global value chains and creates new opportunities for SMEs.”

Key Sectoral Benefits:

• Textiles and Apparel: Tariff elimination boosts India’s competitiveness against Bangladesh and Vietnam.
• Leather and Footwear: Enhanced access to premium UK retail markets.
• Gems and Jewellery: Impetus to India’s handcrafted and diamond processing exports.
• Pharmaceuticals: Faster approvals for generics through regulatory streamlining.
• Agriculture & Processed Foods: Easier entry for products like tea, spices, rice, and ready-to-eat meals.

The agreement also includes modern chapters on digital trade, IPR protection, investment facilitation, and dispute resolution, offering long-term stability and predictability for businesses on both sides.

Economic and Strategic Impact

• Bilateral trade to exceed $50 billion in the next few years.
• Job creation and innovation to receive a major push in both countries.
• Enhanced mobility for students, professionals, and entrepreneurs.
• Technology, defence, clean energy, and digital services to emerge as high-growth areas of collaboration.
• MSMEs and startups will gain better access to capital, knowledge-sharing, and export markets.

Next Steps: A New Era in India–UK Economic Diplomacy

Prime Minister Modi extended an invitation to Prime Minister Starmer to visit India, which the British leader welcomed. Both leaders reaffirmed their commitment to close cooperation in implementing the agreements and shaping a resilient, inclusive, and innovation-led partnership.

As India continues to position itself as a pivotal player in global trade, the India–UK FTA stands as a testament to the country's growing economic strength and diplomatic agility. For the UK, the deal reinforces its post-Brexit vision of a ‘Global Britain’ anchored in dynamic, emerging markets.

The agreement is not merely a trade deal—it is a strategic reset that will shape the future of India–UK relations for decades to come.