UK, India FTA Expected to Increase Annual Trade by $34 Billion by 2040

London, July 24: India and the UK today took a major step forward by unveiling the UK‑India Vision 2035 roadmap, alongside the formal signing of a landmark Free Trade Agreement (FTA). The FTA is projected to boost bilateral trade by £25.5 billion (~US$34 billion) annually by 2040, slash tariffs on nearly 99% of Indian exports, and cut UK duties on products such as whisky and cars from an initial 150% to 75%, with a further reduction to 40% over ten years. The Vision 2035 roadmap outlines strategic cooperation across defence, technology, energy, climate, education, and innovation. Highlights include a Defence Industrial Roadmap, enhanced intelligence-sharing on security, and partnerships in frontier technologies like AI and semiconductors.

UK-India FTA: A Historic Economic Milestone

This landmark agreement marks the UK’s most significant post‑Brexit trade pact and India’s first comprehensive FTA with a European country, signaling a shift towards deeper economic and strategic ties in a rapidly changing global landscape. As per preliminary estimates, the FTA is expected to:

• Boost annual bilateral trade by USD 34 billion
• Raise UK GDP by £4.8 billion
• Increase wages in the UK by £2.2 billion per year
• Create new market access in critical sectors such as pharmaceuticals, financial services, legal services, automobiles, food and beverages, textiles, and renewable energy

The trade deal is central to today’s talks at Prime Minister Starmer’s Chequers countryside retreat in Buckinghamshire, where both leaders are also expected to oversee the Vision 2035 launch.

Vision 2035: A Decade of Strategic Collaboration

British Foreign Secretary David Lammy highlighted that the UK-India Vision 2035 will serve as a future-focused blueprint to deepen ties beyond trade. It is designed to:

• Strengthen defence and security cooperation
• Drive technology and innovation partnerships
• Accelerate action on climate and clean energy
• Expand collaboration in education and skills development

“This new work plan will unlock new opportunities for trade and investment, promote peace in the Indo-Pacific, and shape the technologies of tomorrow,” said Lammy.

New Frontiers: Technology, Minerals, and Green Finance

Vision 2035 also introduces emerging areas of cooperation, including:

• Advanced technologies
• Critical minerals
• Green finance

The agreement establishes robust mechanisms to ensure effective delivery, with a commitment to annual reviews to keep the roadmap aligned with evolving global challenges.

Strategic and Developmental Alignment

On foreign policy, Lammy described India as a “pivotal partner” in the Indo-Pacific and Indian Ocean Region, reinforcing a shared vision for a free, open, and secure regional order.

In development cooperation, the UK reiterated that it ceased direct aid to India in 2015, transitioning instead to an investment-led model supporting India’s green growth and sustainable development objectives.

“India’s development choices will shape global outcomes,” Lammy emphasized, noting the alignment of India’s climate agenda with the UK’s priorities of economic growth, trade, and security.

A Revitalised UK-India Partnership

With bilateral trade targeted to double to USD 120 billion by 2030, both countries are poised to enter a new era of engagement built on mutual growth, innovation, and strategic alignment.

“Through Vision 2035 and the FTA, the UK is in the best position to partner with India over the next decade,” said Lammy, underlining the long-term commitment to this pivotal relationship.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations