New Delhi: After three years of negotiations, Indian Prime Minister Narendra Modi and his UK counterpart Keir Starmer on Thursday (July 24) witnessed the signing of a free trade agreement that officials hope will double bilateral trade within five years.

Modi, who is on a short visit to the UK, held a three-hour meeting with Starmer at the British prime minister’s country residence, Chequers. The main outcome of the talks was their joint announcement of the trade pact, which will reduce tariffs on whisky and automobiles entering India, while easing access for Indian textiles and gems into the UK market.

The text of the deal, termed a Comprehensive Economic and Trade Agreement (CETA), had already been officially concluded in May, when it was jointly announced after a phone call between the two prime ministers.

Most contours of the deal had already been made clear, per which it was to slash tariffs on 90% of tariff lines.

In his official remarks, Modi said that the deal “paves the way for enhanced market access in the UK for Indian textiles, footwear, gems and jewellery, seafood, and engineering goods”.

He added that it will also increase opportunities for India’s agricultural produce and processed food industry.

“On the other hand, UK-made products such as medical devices and aerospace components will become more accessible and affordable for Indian consumers and industries,” he said.

The UK PM termed the deal as the “the biggest and most economically significant” trade deal for Britain since it left the European Union.

"This deal is now signed, sealed, delivered," he said.

"The UK has been negotiating a deal like this for many years, but it is this government that got it done, and with it, we're sending a very powerful message that Britain is open for business, and that is already generating huge confidence."

An impact assessment by the UK’s Department of Business and Trade estimated that British exports to India will rise by 60% by 2040, reaching around £15.7 billion (approximately $20.3 billion).

Imports from India to the UK are projected to grow by 25% over the same period.

The UK government said the free trade agreement will lead to a sharp reduction in import duties levied by India on British goods, bringing the average tariff down from 15% to just 3%.

Under the terms of the deal, duties on British whisky and gin, currently set at 150%, will be halved to 75% immediately, and gradually reduced to 40% by the tenth year of its implementation.

Similarly, Indian import taxes on British cars, which presently exceed 100%, will drop to 10%, but within a specified quota, according to UK officials.

L. Satya Srinivas, special secretary in the Indian Ministry of Commerce, said New Delhi is aiming to double bilateral trade by 2030. India-UK bilateral trade stood at $55 billion in 2024.

Modi also announced that a “consensus has been reached on the Double Contribution Convention,” referring to social security contributions made by professionals working abroad. The two countries have agreed to begin negotiations on a separate treaty that would exempt such professionals from paying social security taxes in both countries.

The issue had drawn criticism from members of the opposition Conservative Party earlier this year, who warned it could lead to an increase in the number of Indian workers entering the UK.

Both governments signed a joint letter stating that the text of the social security treaty would be finalised in the coming months and implemented at the same time as the trade deal.

The UK parliament has yet to okay the trade deal, so it may take a year to come into force.

With India seeking the extradition of several fugitives like Nirav Modi and Vijay Mallya, Modi said, “On the matter of the extradition of economic offenders as well, our agencies will continue to work together in close coordination and cooperation”.

A memorandum of understanding was signed between the Central Bureau of Investigation of India and the UK's National Crime Agency.

Without naming Khalistani groups, Modi expressed concern about their activities in the UK. “We agree that forces with extremist ideologies must not be allowed to misuse democratic freedoms. Those who misuse democratic freedoms to undermine democracy itself must be held to account,” he said.

In March 2023, the Indian high commission in London was targeted by Khalistani protesters, prompting concern in New Delhi. The UK government has maintained that peaceful protests cannot be banned outright.

According to BBC News, Starmer also raised the case of Jagtar Singh Johal, a Scottish Sikh activist jailed in India since 2017, during his talks with Modi.

Modi emphasised the need for a tough stance on terrorism. “We thank Prime Minister Starmer and his government for their strong condemnation of the terrorist attack in Pahalgam. We are united in our view that there can be no place for double standards in the fight against terrorism,” he said.

A joint statement titled Vision 2035 said that both countries agree to “combat financing of terrorism and the cross-border movement of terrorists”.

The two sides also finalised a defence industrial roadmap to promote the joint design, development and production of defence platforms and technologies.

Before leaving for the next leg of his foreign trip to the Maldives, Modi also called upon King Charles III at his Sandringham estate.

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