In a much-awaited development, Indian Prime Minister Narendra Modi and UK Prime Minister Sir Keir Starmer welcomed the signing of the historic India-UK Comprehensive Economic and Trade Agreement (CETA) that will potentially enhance bilateral trade, investment, economic collaboration, and job creation in both nations. The development comes in the backdrop of Prime Minister Narendra Modi’s visit to the United Kingdom that was scheduled from July 23 to 24, 2025.

The bilateral relationship between India and the UK was upgraded to a Comprehensive Strategic Partnership (CSP) in May 2021, and since then the nations have been witnessing considerable growth and collaboration across domains such as trade, investment, technology, innovation, defense, education, sustainability, health, and people-to-people ties. 

CETA and India’s share

Since the upgradation of the bilateral relationship to a Comprehensive Strategic Partnership, the countries have been progressing with a ten-year roadmap across all the sectors, including trade and investments, defense and security, technology, science and innovation, and people-to-people ties. The nations have been negotiating FTA since January 2022, with teams from the countries scheduling meetings to discuss outstanding issues of the agreement. Thereafter, the discussions continued for three years, and since 2024 the Indian side has been engaging with the newly sworn Labour Government in the UK, with Indian Minister for Commerce and Industries Mr. Piyush Goyal meeting UK Secretary of State for Business and Trade Mr. Jonathan Reynolds even on the sidelines of the G7 Trade Ministers Meeting in Apulia, Italy, in July 2024 to proceed with the FTA. Subsequently, it was only on May 6th, 2025, that the nations announced the conclusion to the trade deal, which is one of the most consequential deals for India, considering it’s a crucial strategic partnership with an advanced economy, and for the UK, since it is the biggest and most economically significant one after leaving the EU. The deal has been signed by Indian Minister for Commerce Mr. Piyush Goyal and UK Secretary of State Mr. Jonathan Reynolds on 24th July 2025 in the presence of their heads of government.

The CETA is poised to be a modern and comprehensive agreement that aims to reduce tariffs and non-tariff measures imposed on businesses, making it easier to trade. An agreement between the fifth (India) and sixth (UK) largest economies of the world, the FTA’s improved market access and reduced regulation are expected to create opportunities for businesses and consumers for both the nations.

As for the Indian side, the trade deal would ensure duty-free access for 99% of Indian exports to the UK, covering the majority of the trade portfolio for labor-intensive industries such as agriculture, textiles, marine products, leather, footwear, sports goods, toys, gems, and jewelry, along with high-growth sectors like engineering goods, auto components, auto computers, and organic chemicals. The entry of Indian-made goods in the European market would further give them the necessary global exposure and edge to compete with international goods and products. With the UK being a potential gateway to Europe, Indian goods could find a significant place in the diverse European market. Whereas at home, this will also boost the domestic industry, leading to large-scale employment generation, thereby enhancing the capabilities of the Indian industries. Whereas for the UK, the terms of the agreement have been such that India has opened 89.5% of its tariff lines, covering 91% of the UK’s exports, safeguarding sensitive Indian sectors and important products where domestic capability is being built. For such products, India, under the Make in India or Production Linked Incentive (PLI) scheme, will provide gradual tariff reduction over five, seven, or ten years. The bilateral safeguards have been built to manage sudden imports that could harm the domestic industries.

At the services level, the agreement provides greater market access in services like IT, finance, legal, professional, educational, and digital trading. This will entail Indian professionals, including those deployed by companies to work in the UK across all sectors, as well as those on contracts, such as architects, engineers, chefs, musicians, business visitors, and independent professionals, to benefit from simplified visa procedures and liberalized entry categories, making it hassle-free for Indian nationals to work in the UK. The deal has also been made inclusive, as it will enable women and youth entrepreneurs, farmers, fishermen, start-ups, and MSMEs to gain access to global value chains, supported by provisions that encourage innovation, sustainable practices, and reduction in non-tariff barriers.

Additionally, a reciprocal Double Contributions Convention (DCC) has also been brought to the fore that will exempt Indian workers and their employers from UK social security contributions for up to three years, leading to competitiveness for the Indian talent and their earnings. This implies that DCC will support business and trade by ensuring that employees who move between India and the UK and their employers will only be liable to pay social security contributions in one country at a time. The DCC will also make sure that employees temporarily working in the host country will continue to pay social security contributions in their home country, preventing fragmentation of their social security record. This social security agreement is similar to the UK’s social security agreements with countries like Switzerland, Norway, and Canada. This provision will not affect access to benefits or the UK immigration health surcharge and will come into force, parallel to the broader FTA. Moreover, PM Modi also noted that the two sides could work to promote greater collaboration between GIFT City in Gujarat, India’s first international financial center, and the UK’s vibrant financial ecosystem.

At the strategic level, the deal is valuable for India, considering its exit from the Regional Comprehensive Economic Partnership (RECP) of 2019. India can strategize individual agreements that better suit its manufacturing priorities instead of a deal like RCEP, in which India has an unfavorable trade balance with member countries, with an added apprehension of Chinese goods being dumped in the Indian markets. Bilateral agreements provide India with higher flexibility in keeping its sensitive sectors like agriculture and dairy secure and unexposed to unregulated competition.

Other Engagements of the PM’s Visit

PM Modi and PM Starmer also endorsed the new India-UK Joint Vision 2035 that reaffirmed their shared commitment to unlocking their revitalized partnership. The pillars of the Vision 2035 include growth and jobs in the UK and India, education and skills partnership, climate partnership, technology innovation, and defense and security. These pillars are poised to set clear strategic goals leading to a path for sustained future collaboration and innovation.

During the course of the visit, PM Modi also called on His Majesty King Charles III at Sandringham Estate, the summer residence of His Majesty. The Prime Minister and His Majesty held discussions on health and sustainable living, bilateral ties, and working together in the Commonwealth.