India, UK seal historic Free Trade Agreement, bolster strategic partnership

New Delhi: In a landmark development, India and the United Kingdom have successfully concluded a comprehensive Free Trade Agreement (FTA) alongside a Double Contribution Convention, marking a new chapter in their bilateral relations. The announcement was made by Prime Minister Narendra Modi following a conversation with his British counterpart, PM Keir Starmer, on Tuesday. 

The agreements are poised to deepen the Comprehensive Strategic Partnership between the two nations, fostering trade, investment, job creation, and innovation.

Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our…

— Narendra Modi (@narendramodi) May 6, 2025

The India-UK FTA, which has been in negotiation since January 2022, builds on the foundation laid by the 2021 "Enhanced Trade Partnership" initiated under former UK Prime Minister Boris Johnson. Despite early optimism to finalise the deal by Diwali 2022, successive rounds of talks, 13 by December 2023, faced delays due to elections in both countries and differing priorities. 

The UK had sought access to India’s government procurement markets and a bilateral investment treaty, while India prioritised smoother visa processes for its citizens. 

The breakthrough, achieved after Modi’s re-election in June 2024 and Starmer’s rise to power, reflects a shared commitment to economic collaboration amid global trade uncertainties.

The Double Contribution Convention, an extension of the 1993 UK-India Double Taxation Agreement, aims to eliminate double taxation on income such as profits from international operations, ensuring businesses and individuals in both nations are not taxed twice on the same earnings. For instance, profits from operating aircraft in international traffic will now be taxed solely in the enterprise’s home country, a move expected to encourage cross-border operations.

In his statement on X, PM Modi expressed delight at the milestone, emphasising its potential to “catalyse trade, investment, growth, job creation, and innovation in both our economies.” He also extended an invitation to PM Starmer to visit India soon, signalling further strengthening of ties. 

The announcement aligns with the 2030 Roadmap for India-UK Future Relations, a framework established in 2021 to elevate the bilateral relationship into a Comprehensive Strategic Partnership, covering trade, health, security, and technology.

The timing of the agreement is significant, as global trade faces headwinds from US President Donald Trump’s tariff policies. In April 2025, Trump introduced a 10% baseline tariff on all imports, with higher duties targeting dozens of countries, raising fears of a global recession. The International Monetary Fund warned of sluggish growth, and JP Morgan estimated a 60% chance of a global economic downturn by year-end. Against this backdrop, the India-UK FTA positions both nations to counterbalance trade uncertainties, leveraging their dynamic private sectors to drive shared prosperity.