On July 24, 2025, Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer signed a landmark Free Trade Agreement (FTA) during Modi’s official visit to London, marking a watershed moment in bilateral relations. The pact, initially agreed in principle on May 6, was finalized after more than three years of negotiations.

Under the deal, 99% of Indian exports—including textiles, leather goods, gems & jewellery, pharmaceuticals, and engineering products—will enter the UK duty‑free. Conversely, India will reduce tariffs on British whisky and gin from 150% to 75%, and lower car import duties from over 100% to 10% (subject to quota).

The agreement is projected to boost bilateral trade by £25.5 billion annually by 2040, while increasing UK GDP growth by £4.8 billion per year and raising wages by £2.2 billion annually. The FTA also facilitates social security exemptions for Indian professionals working in the UK and opens procurement opportunities worth £38 billion. 

Industry groups such as the Federation of Indian Export Organisations (FIEO) welcomed the deal, highlighting massive gains for labor-intensive export sectors. UK exporters are expected to gain from expanded access to India's fast-growing consumer market. Pending parliamentary ratification, this FTA is set to redefine trade between the two nations.