India-UK Free Trade Agreement
The India-UK Free Trade Agreement (FTA) was finalised in 2025, marking milestone in bilateral relations. This agreement aims to enhance trade and economic cooperation between two major economies. The FTA was a long-anticipated outcome of negotiations that began in 2022 during Boris Johnson’s tenure as Prime Minister. The agreement is expected to stimulate economic activity in both countries and create new opportunities, particularly for Indian businesses and Micro, Small, and Medium Enterprises (MSMEs).
Background of the Agreement
The FTA discussions commenced after Brexit, with the UK seeking to establish new trade partnerships. The urgency for a deal increased due to changing global economic dynamics. The UK has been proactive in negotiating with India, viewing it as a vital trade partner. The agreement was finalised after extensive negotiations that spanned multiple political administrations in the UK.
Key Takeaways from the FTA
Three primary outcomes characterise the FTA. Firstly, it positions the UK ahead of India’s other trade negotiations, notably with the US and the European Union. Secondly, the agreement reflects a bipartisan consensus in the UK regarding the importance of the India-UK relationship. Thirdly, it reinforces the economic pillar of the Comprehensive Strategic Partnership between India and the UK.
Economic Impact
The FTA is expected to enhance bilateral trade . As of late 2024, India and the UK reported a trade volume of £40.9 billion. India is the UK’s 11th largest trading partner, contributing to 2.4% of the UK’s total trade. The FTA aims to increase this figure by facilitating easier access to markets and reducing tariffs.
Future Prospects
The FTA is viewed as a foundation for deeper collaboration across various sectors, including defence, education, and technology. Both countries are committed to strengthening ties, with the Government of India emphasising that the FTA is merely the beginning of a broader partnership. Prime Minister Modi has invited UK Prime Minister Keir Starmer to visit India, signalling intent for ongoing dialogue and cooperation.
Strategic Importance
The FTA holds strategic importance for both nations. It not only enhances economic relations but also serves as a platform for collaboration in defence and security. The agreement is seen as very important in encouraging trust and cooperation in other critical areas, thereby solidifying the Comprehensive Strategic Partnership.
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