Amidst the global trade turmoil caused by U.S. President Donald Trump’s tariffs and the ongoing bilateral trade talks between India and the United States, the signing of a Free Trade Agreement (FTA) between India and the United Kingdom is, in itself, very significant. The agreement was signed in the presence of Prime Minister Narendra Modi and UK Prime Minister Keir Starmer. This deal was finalized after nearly four years of negotiations. Talks on the FTA began in 2021 during the tenure of then British Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi. That was a time when the UK economy was facing instability. Liz Truss and later Rishi Sunak—of Indian origin—played key roles in advancing this agreement. Now, under the leadership of Prime Minister Keir Starmer, the agreement has finally materialized. After four years and four British prime ministers, success has finally been achieved. This major deal is expected to benefit both India and the UK substantially.
Today’s era is one of trade—give with one hand and take with the other. The first condition of friendship now lies in establishing economic relations between countries. Once, the UK ruled over India. The colonial history of Britain has played a crucial role in shaping relations with India. While this history cannot be undone, changing times have brought new turns in the relationship between the two nations. Everyone knows the history of British rule; there is no need to dig it up now. All in all, this agreement is a win-win for both countries. It will support the UK’s economy and bring significant benefits to India as well. This agreement is proof of the maturity of India’s strategic trade policy. It is not just an FTA—it is a strong platform to propel Indian producers and service providers into global competition.
Under this Free Trade Agreement, India and the UK have paved the way for reducing customs duties on imports and exports of goods and services, simplifying non-tariff barriers, and promoting cooperation in areas such as digital trade, financial services, education, and investment. It is expected that after the implementation of the agreement, trade between the two countries will double from $30 billion by 2030. Dr. Surjit Bhalla, former representative of India to the International Monetary Fund, has said that India now needed such an FTA strategy that is not just ‘trade-free’ but also ‘development-friendly.’ The agreement with the UK is a step in that direction and will further strengthen India’s service sector.
British investment in India will increase. The process for UK companies to enter India will become easier. This will boost sectors such as manufacturing, retail, education, and financial services. There will be an infusion of technology management and capital into local industries, giving a push to India’s industrial development. New employment opportunities will arise for India’s young population, and doors to the UK will open for them as well.
In fact, the UK’s experience with the European Union was quite bitter. It was only after a public referendum that the UK exited the EU. After the upheaval of Brexit, the UK needed to establish a strong global presence by seeking new markets. The biggest challenge for it was to find new partners after separating from the EU. The key question was—what would be the UK’s policy in the South Asian region? It was in response to this question that a new phase of India-UK relations began. After being tied to the integrated market of the European Union for years and enduring the COVID-19 pandemic, it was a big challenge for the UK to maintain the pace of economic and trade growth. The UK saw potential in India that could fulfill its economic ambitions. India is now a major global economy and cannot be ignored. This is the reason India-UK trade relations took a new turn.
lthough the UK has signed trade agreements with the European Union after five years, it has also expanded its relations with other countries. The impact of Free Trade Agreements largely depends on how much trade is conducted between the involved countries and how much liberalization the agreement brings. If the countries already conduct significant trade—like being pulled by gravitational force—economists refer to this as the Gravity Model. It is believed that through a trade agreement with India, the UK will be able to compensate for any loss of access to the European Union market.
This agreement has been made in a respectful and diligent manner. India signed the agreement after continued negotiations and with considerable patience, despite obstacles. Through this agreement, Prime Minister Narendra Modi has also sent a clear message to U.S. President Donald Trump—that deals are not made through tariff threats but through patience and mutual trust. If Donald Trump wants to use threats to negotiate trade deals, they will never be sustainable. The U.S. should learn a lesson from this. Trump must have already received the message that India is not solely dependent on America. India is not going to bow to America’s threats. Prime Minister Narendra Modi is striking trade deals with both small and large nations alike. This clearly shows that a sovereign nation like India favors policy independence. Only diplomacy and mutual respect can lead to lasting agreements—not threats.