A social security agreement was also signed, allowing over 60,000 Indian IT professionals in the UK to avoid social security contributions for up to three years, potentially saving nearly 20% in salaries.

The agreement also aims to boost demand for UK goods among India’s expanding middle class, although some sectors like pharmaceuticals are excluded from the deal.

India and the UK have finalized a historic Free Trade Agreement (FTA) on May 6, 2025, after over three years of negotiations, with Prime Minister Narendra Modi calling it a 'historic milestone.'

The FTA aims to double bilateral trade to $120 billion by 2030, up from $56.7 billion in 2024, significantly boosting economic ties.

The legal review of the FTA is currently underway, and officials expect the signing to occur next week, followed by ratification by the UK Parliament and India's Union Cabinet, with implementation anticipated around a year later.

Future negotiations will address policy differences, including a social security pact for temporary workers and exemptions from a planned carbon tax on Indian exports, as India seeks to diversify its trade partnerships.

In 2024, India’s merchandise exports to the UK were approximately US$14 billion, making it India’s sixth-largest export market, while UK exports to India totaled about US$9 billion.

The agreement will eliminate import taxes on Indian exports such as leather goods, clothing, footwear, toys, marine products, and gems and jewelry.

Tariffs on UK whisky and gin will be halved from 150% to 75% initially, decreasing further to 40% over ten years, while automotive duties will drop from 100% to 10% under a quota.

British products like whisky, gin, cars, medical devices, cosmetics, chocolates, and soft drinks are expected to become more affordable in India due to the tariff reductions.

India has excluded sensitive agricultural items such as apples, cheese, and dairy products from tariff concessions to protect local interests.

The FTA's benefits for India are expected to be moderate, with gradual tariff reductions over the next decade and increased worker mobility potentially boosting remittances.

India’s key export sectors to the UK include motor vehicles, computers, and textiles, while the UK mainly exports non-ferrous metals, especially precious metals.