Modi and Starmer Seal Landmark UK-India Trade Deal

In a historic economic partnership, Indian Prime Minister Narendra Modi and UK Prime Minister Sir Keir Starmer have on Thursday, signed a sweeping free trade agreement set to deliver a multi-billion pound boost to exports for both nations.

The deal, three years in the making, is being hailed as the most substantial trade agreement signed by the UK since its departure from the European Union.

The agreement reduces tariffs on key goods, opening up new opportunities for businesses in both countries.

British exports such as whisky, gin, luxury cars, medical devices, and aerospace parts will become significantly cheaper for Indian buyers.

In return, Indian exports including textiles, footwear, seafood, and jewellery will enjoy easier access to UK markets.

Sir Keir described the pact as “the biggest and most economically significant” trade deal post-Brexit, praising the agreement as a signal that “Britain is open for business.”

Speaking at the ceremonial signing at Chequers, the prime minister said the deal is already generating confidence among investors and businesses.

“This deal is now signed, sealed, delivered,” said Starmer.

“It was this government that got it done, and it will help create jobs, support businesses, and strengthen our bond with one of the world’s fastest-growing economies.”

Modi echoed those sentiments, calling the agreement “a blueprint for our shared prosperity.”

He highlighted the mutual benefits, pointing out that Indian industries will now have more affordable access to UK-made products.

These products include medical equipment and aerospace components, while Indian goods like gems, textiles, and engineering products will find it easier to reach British consumers.

According to the UK government, the trade agreement is expected to boost the UK economy by £4.8 billion annually.

It is also expected to create more than 2,200 jobs across the country as Indian companies expand operations in Britain and British firms tap into India’s vast consumer base.

The deal also addresses broader collaboration beyond trade, with both leaders agreeing to deepen ties in areas such as defense, education, climate action, and technological innovation.

A renewed commitment to combatting illegal migration, organized crime, and fraud was also included.

There are also plans for a new criminal records sharing agreement to support law enforcement and judicial cooperation.

One of the most immediate benefits of the agreement is the dramatic reduction in tariffs.

Average duties on UK exports to India will fall from 15% to just 3%, making British goods far more competitive.

Whisky tariffs, in particular, have been halved from 150% to 75%, with a further reduction to 40% expected by 2035.

Indian firms are set to benefit as well, particularly in the electric and hybrid vehicle sectors, which will now enjoy expanded access to UK markets.

Meanwhile, Indian manufacturers of textiles, jewellery, and seafood will face fewer trade barriers when exporting to Britain.

However, the deal is not without controversy. Some critics argue it could disadvantage British workers, particularly over provisions related to social security contributions.

Under the agreement, Indian and UK employees on temporary work assignments will only pay into their home country’s system.

The Indian government has described this exemption as a major achievement.

UK Business Secretary Jonathan Reynolds dismissed concerns about domestic workers being undercut, stating, “There is no tax advantage for hiring an Indian worker over a British worker.”

He added that visa costs and NHS surcharges make hiring overseas workers more expensive, not less.

Despite being signed, the agreement still awaits ratification by the UK Parliament and is expected to take at least a year before coming into full effect.

Notably, it does not yet include full access to India’s financial and legal services markets, though negotiations on a bilateral investment treaty are ongoing.

The signing of the deal comes as Modi makes his fourth official visit to the UK since 2014. It also follows last year’s UK-India Technology Security Initiative, underscoring a trend of growing strategic cooperation between the two countries.

Originally launched under former Prime Minister Boris Johnson in 2022, the trade talks have spanned multiple political transitions in both nations.

Now finalized, the agreement represents a significant milestone in UK-India relations, one with the potential to reshape trade dynamics and drive long-term economic growth on both sides.

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