The FTA has the stamp of a bipartisan consensus in the UK — and that tells the story of India-UK ties broadly.
While Boris Johnson had kickstarted negotiations in 2022, in July this year, after Starmer led the Labour landslide win, he spoke to Modi and “agreed to work towards an early conclusion of a mutually beneficial India-UK free trade agreement”.
India-UK: Dependable ties in an uncertain world
In the current global environment, where US President Donald Trump’s disruptive approach has created uncertainties, India and the UK have the opportunity to be reliable and predictable partners.
As an Indian official said, “the FTA is the floor, not the ceiling (for the relationship).”
While Starmer is facing severe political challenges back home, he continues to play a significant role on the global stage. For instance, after Ukrainian President Volodymyr Zelenskyy’s disastrous White House meeting with Trump in March this year, he got European leaders and major democracies, including, Australia, Canada, and Japan, to form the Coalition of the Willing against Russia’s invasion.
Living bridge between the nations
The Indian diaspora forms about 2.6% of the UK population, contributing to academia, literature, science, business, and politics. More than 65,000 companies in the UK are owned by the Indian diaspora, and these contribute heavily to job creation, local economic growth, and taxes. And this is called the “living bridge” between the two countries.
The India-UK relationship is robust, multi-faceted, and mutually beneficial relationship, and on May 6 this year, it was elevated to a new level, when the two PMs announced the conclusion of the India-UK FTA and Double Contribution Convention.
Then during PM Modi’s visit to the UK in July, a Comprehensive Economic and Trade Agreement (CETA), the Vision 2035 document, as well as a new Defence Industrial Roadmap were signed.
The key pillars of India-UK Vision 2035 include growth and jobs in the UK and India, education and skills partnership to nurture the next generation of global talent, developing cutting-edge technology and research, and strengthening resilience, defence and security co-operation.
Here’s a look at the different facets of this relationship and the vision for the future.
Economic cooperation
The India–UK FTA brings together the world’s 5th and 6th largest economies.
Bilateral trade (both goods and services) stood at around USD 56 billion during 2024 with imports at around 17 billion and exports at around 26 billion pounds. Total bilateral trade in goods is around 18 billion pounds while trade in services is around 25 billion pounds in 2024. Now, the bilateral trade is projected to double by 2030.
The FTA is expected to give Indian businesses more competitive market access in focus sectors like textiles, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines.
Indian and British companies employ more than 650,000 people in each other’s countries.
In a bigger market access for Indian exporters, the India UK CETA provides duty free access to approximately 99 per cent of Indian exports by value. This supports MSMEs too and boosts jobs.
It also creates more services opportunities as the agreement enables growth in IT and ITeS, financial and professional services, education, and other business services. This has the potential to expand high-skill jobs across India.
It also means lower costs for professionals and employers, and the Double Contributions Convention provides a three-year exemption from UK social security for eligible Indian workers on temporary assignment and their employers. This benefits more than 75,000 workers.
Defence cooperation
A Defence Industrial Roadmap for collaboration in co-design, co-development and co-production of defence products is expected to meet the growing demand in both countries, as well as cater to the world market. A key area the two countries are working towards is jet engines.
A broad spectrum of activities, including joint military exercises, port calls, defence technological cooperation, promoting Make in India, subject matter expert exchanges for exchange of best practises (SMEEs), defence education, and defence procurement are also taking place.
Education
The number of Indian students in the UK is around 170,000. Various UK universities are planning to establish campuses in India, including the University of Southampton coming to Gurugram, making it the first foreign university to set up a campus under the New Education Policy.
An MoU for mutual recognition of academic qualifications was signed in July 2022, and hence, UK degrees are formally recognised in India.
Scholarships and pathways: Chevening Scholarships and the Young Professionals Scheme together create a clear study-to-work pathway between the two countries.
Young Professionals Scheme: About 3,000 young professionals from each country can live and work in the other country for up to two years. This supports early career growth and skills transfer.
Education as an investment magnet: Education is among the top sectors attracting UK foreign direct investment into India. This supports new programmes, partnerships and jobs in teaching, research and edtech.
Queen’s University of Belfast and the University of Surrey are both about to set up their international branch campus at GIFT IFSC, Gujarat.
Research and Innovation
An India-UK Science and Innovation Council (SIC) is held once every two years to develop bilateral relationships in science, technology and innovation.
The UK is India’s second largest international research and innovation partner with a joint research programme pegged at £300-400 million.
An MoU was signed in April 2023 for wider cooperation, especially in quantum technology, clean energy, pandemic preparedness, AI and machine learning.
There is a plan to establish a new India-UK Net Zero Innovation Virtual Centre focusing on industrial decarbonisation, and work on focus areas including use of green hydrogen as a renewable energy source.
Culture
Film co-production framework: An updated co-production framework is expected to help Indian and UK producers access incentives in both markets. It supports jobs for crews, VFX and post production, and helps stories travel to wider audiences. Significantly, Trump recently said he would impose 100 per cent tariffs on all movies made outside of the US.
Creative industries growth: The cultural agreement signals support for creative businesses. It helps festivals, labels, publishers and production houses to build cross-border projects that generate local jobs for artists, technicians and venue workers.
People first benefits: More shows and exhibitions in Indian cities, more Indian content on UK platforms and vice versa, and more training and exchange opportunities for young creators.
Connectivity
More local access to services: New Consulates General of India in Manchester and Belfast were inaugurated in March, expanding services beyond London, Birmingham and Edinburgh. This brings passport, OCI and consular support closer to large Indian communities in Northern England and Northern Ireland.
More flights and seats: Virgin Atlantic operates a daily London to Bengaluru service from March 2024. British Airways added a new daily Delhi to London flight from April this year. IndiGo has announced Delhi to Manchester flights starting November 15, using leased Boeing 787 9 aircraft. Air India continues substantial UK operations from multiple Indian cities to London airports.
This is a reciprocal visit by the British PM, after Modi travelled to the UK in July this year and they signed the Free Trade Agreement (FTA).
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