India and UK Finalize Historic Free Trade and Double Contribution Agreements
Prime Minister Narendra Modi announced the successful conclusion of key agreements with UK Prime Minister Keir Starmer during a phone conversation. Modi described it as a "historic milestone", stating that India and the United Kingdom have finalized a mutually beneficial and ambitious Free Trade Agreement (FTA) alongside a Double Contribution Agreement.
He said, “These historic agreements will deepen our comprehensive strategic partnership and promote trade, investment, innovation, employment, and growth in both economies.”
British Prime Minister Keir Starmer also hailed the deal as historic, stating it would benefit workers and businesses in both countries. The two nations have also concluded discussions on a double contribution agreement that will help Indian professionals working temporarily in the UK avoid dual contributions to the social security fund.
According to the Ministry of Commerce, “Under the Double Contribution Agreement, Indian workers temporarily staying in the UK, and their employers, will be exempted from paying social security contributions in the UK for up to three years. This will provide significant financial relief to Indian service providers.”
However, negotiations on the Bilateral Investment Treaty (BIT) between India and the UK are still ongoing. Initially, the plan was to finalize all three agreements together. The Commerce Ministry emphasized that the FTA with the UK is a modern, comprehensive, and historic pact aimed at liberalizing trade and achieving deeper economic integration.
India is expected to benefit from the elimination of tariffs on nearly 99% of product categories, covering almost 100% of trade value. In services, India will gain in areas such as IT and related services, finance, professional, and educational sectors.
The Ministry added, “This agreement opens vast opportunities for talented and skilled Indian youth in the UK, which is a leading global hub for digital services due to its strong financial and professional service sectors and advanced digital infrastructure.”
Additionally, India has secured significant commitments in digitally delivered services such as architecture, engineering, computing, and telecommunications. The Ministry emphasized that non-tariff barriers are also being addressed to ensure the smooth flow of goods and services without imposing unreasonable restrictions on Indian exports.
The agreement will now undergo legal formalities and require approval from the British Parliament before implementation. This process may take up to a year.
The negotiations for this agreement began in January 2022, with both sides holding a total of 14 rounds of talks. Under the FTA, both countries agree to eliminate or significantly reduce tariffs on the maximum number of traded products, and facilitate trade in services and investments. Bilateral trade between India and the UK reached $21.34 billion in FY 2023-24, and $21.33 billion in the first ten months of FY 2024-25.
Security Notes
- Sarjal Camp is 8 km inside the international border and is known to host Jaish militants.
- Mahmuna Camp is located 15 km inside the international border.