New Delhi/London, July 24: India and the United Kingdom on Thursday signed a landmark free trade agreement that promises to reshape bilateral economic ties by reducing tariffs across a wide range of goods and services, boosting employment, and unlocking new market opportunities for both countries.
The pact — formally named the Comprehensive Economic and Trade Agreement (CETA) — was signed by Commerce Minister Piyush Goyal and UK Trade Secretary Jonathan Reynolds in the presence of Prime Ministers Narendra Modi and Keir Starmer at Chequers, the British PM’s countryside residence near London.
Calling it a “historic day,” Starmer welcomed Modi and said the agreement marked the realisation of a long-standing commitment. “I’m really pleased and privileged to welcome you here today… This is a historic day for both of our countries,” he said.
The agreement, finalised after three years of negotiation, aims to eliminate tariffs on 99 per cent of Indian exports and significantly reduce import duties on UK goods, including cars, Scotch whisky, medical devices, aerospace components, and cosmetics. British companies selling goods in India will now face average tariffs of 3 per cent, down from the current average of 15 per cent, the UK Department for Business and Trade (DBT) said.
“This trade deal writes a new chapter in our shared history,” Modi said after the signing. “It will benefit India’s youth, farmers, fishermen and MSMEs. Indian products like textiles, gems and jewellery, seafood, footwear, and processed foods will now have better access to UK markets.”
Modi also emphasised the benefits to Indian consumers and industries: “People and industries in India will now be able to access high-quality British goods such as medical devices and aerospace parts at affordable prices.”
He added that the agreement would “promote ease of doing business, reduce the cost of doing business, and increase confidence in doing business” between the two nations. Modi likened the trade ties to cricket, saying both sides were committed to “playing with a straight bat” and building a “high-scoring, solid partnership.”
The deal also includes a Double Contributions Convention (DCC), aimed at strengthening cooperation in technology, finance, and services, and offering structural support to long-term partnerships across sectors.
The UK expects to benefit from an estimated £4.8 billion increase to its GDP annually, with significant gains for sectors like aerospace (tariffs cut from 11% to zero), automotive (110% to 10% under quotas), electrical machinery (22% to zero), and financial services. Whisky producers will see duties drop from 150% to 75% immediately, and then to 40% over the next 10 years, giving UK exporters a significant edge in the Indian market.
“Every region of the UK will see growth from this deal,” said a DBT spokesperson, citing projections that bilateral trade will rise by nearly 39 per cent, or £25.5 billion annually, by 2040.
India will enjoy tariff elimination on about half of its current exports to the UK, including mangoes, grapes, textiles, footwear, and agricultural produce, making its goods more competitive across British markets.
The UK also gains unprecedented access to India’s clean energy procurement sector — a major move as India shifts to renewable energy — and financial services firms will benefit from “locked-in access” and investment caps that offer stability and parity with domestic providers.
The agreement, hailed as one of the most comprehensive between the two countries, is expected to drive long-term trade, investment and job creation on both sides, with business groups and industry bodies anticipating a fresh wave of economic collaboration.
