Government Announces Deal Aimed at Increasing Jobs, Exports, and National Growth
Honโble Prime Minister of India, Shri Narendra Modi, and Honโble Prime Minister of the United Kingdom, Sir Keir Starmer, have announced the successful conclusion of a landmark Free Trade Agreement (FTA) between India and the UK. This agreement aligns with India’s vision for a developed nation by 2047 and aims to enhance the economic aspirations of both countries. The FTA is expected to foster trade, investment, and job creation, marking a significant milestone in the bilateral relationship.
Background of the Agreement
The FTA builds on discussions held during the G-20 Summit in Rio de Janeiro, Brazil, in November 2024. Following this summit, negotiations resumed in February 2025, led by India’s Commerce and Industry Minister, Shri Piyush Goyal, and the UK Secretary of State, Mr. Jonathan Reynolds. Their teams engaged in intense discussions to finalize the agreement, which is seen as a pivotal step in strengthening economic ties between the two nations. Prime Minister Modi highlighted the agreement’s potential to deepen the Comprehensive Strategic Partnership between India and the UK, emphasizing its role in catalyzing trade and innovation.
Key Features of the FTA
The India-UK FTA is characterized by its comprehensive nature, aiming for deep economic integration and trade liberalization. It ensures significant market access for goods across various sectors, with India set to benefit from tariff eliminations on approximately 99% of tariff lines. This will create substantial opportunities for increasing bilateral trade, which currently stands at around USD 60 billion and is projected to double by 2030. The agreement also addresses non-tariff barriers, ensuring a smoother flow of goods and services between the two countries.
Additionally, the FTA includes provisions that will positively impact sectors such as textiles, marine products, and engineering goods, enhancing the competitiveness of Indian products in the UK market. The agreement is expected to generate high-quality employment opportunities in India, particularly in labor and technology-intensive sectors.
Implications for Indian Workers and Services
A notable achievement within the FTA is the exemption for Indian workers temporarily in the UK from paying social security contributions for three years, under the Double Contribution Convention. This provision is anticipated to enhance the competitiveness of Indian service providers in the UK market. The FTA also opens up new opportunities in various service sectors, including IT, financial services, and professional services, which are crucial for job creation and economic growth.
Moreover, the agreement facilitates the mobility of professionals, allowing for easier movement of contractual service suppliers, business visitors, and independent professionals. This is expected to create immense opportunities for skilled Indian youth in the UK, particularly in sectors that rely heavily on digital services.
Future Prospects and Global Significance
The India-UK FTA is not just a bilateral agreement; it sets a new benchmark for modern trade agreements globally. As two leading democracies and innovation hubs, India and the UK are committed to enhancing economic cooperation and addressing global challenges collaboratively. The FTA is designed to promote sustainable and inclusive economic growth, ensuring resilient supply chains and high-quality employment in India.
With this agreement, both nations reaffirm their dedication to fostering a robust economic partnership that benefits their citizens and contributes to global economic stability. The successful conclusion of the FTA marks a significant step forward in the evolving relationship between India and the UK, paving the way for future collaborations and mutual growth.
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