India-UK Relations Strengthen With Free Trade Agreement

The British Prime Minister Keir Starmer visited India in 2025 for bilateral talks and to attend the Global Fintech Summit in Mumbai. This was his first visit since taking office in July 2024. The visit followed Prime Minister of India Narendra Modi’s trip to the UK in July 2024, where both leaders signed a landmark Free Trade Agreement (FTA). The FTA reflects a broad bipartisan consensus in the UK and signals a new phase in India-UK relations amid global uncertainties.

Background and Diplomatic Context

The India-UK FTA builds on negotiations initiated by former UK Prime Minister Boris Johnson in 2022. After Starmer’s Labour Party won a landslide victory in 2024, he renewed efforts for an early deal. The agreement is seen as a foundation for deeper cooperation. Both countries aim to be reliable partners in a world facing geopolitical volatility. The Indian diaspora in the UK acts as a living bridge, contributing to the economy, culture and politics.

Economic Cooperation and Trade

India and the UK are the world’s fifth and sixth largest economies respectively. Bilateral trade reached around USD 56 billion in 2024. The FTA is expected to double this figure by 2030. Key sectors benefiting include textiles, leather, footwear, gems, engineering goods and auto parts. The agreement provides duty-free access for 99% of Indian exports by value. It also expands opportunities in IT, financial services, education and professional services. Over 650,000 people are employed by Indian and British firms in each other’s countries. The FTA supports MSMEs and creates high-skill jobs.

Defence and Security Cooperation

The two countries signed a Defence Industrial Roadmap to collaborate on co-design, development and production of defence equipment. Jet engine technology is a major focus. Joint military exercises, defence education and procurement cooperation are ongoing. The partnership promotes Make in India initiatives and exchanges of best practices among defence experts.

Education and Research Partnerships

About 170,000 Indian students study in the UK. Several UK universities plan campuses in India under the New Education Policy. Mutual recognition of academic qualifications was formalised in 2022. Scholarship schemes like Chevening and the Young Professionals Scheme facilitate study and work exchanges. Education attracts UK foreign direct investment in India. Research collaboration covers quantum technology, AI, clean energy and pandemic preparedness. The India-UK Science and Innovation Council guides these efforts.

Cultural and Creative Industry Links

An updated film co-production framework supports joint productions and access to incentives. This boosts jobs in crews, VFX and post-production. The cultural agreement encourages festivals, publishers and creative businesses to expand cross-border projects. It increases Indian content on UK platforms and vice versa. Training and exchange programmes for young artists are also promoted.

Connectivity and Consular Services

New Indian consulates in Manchester and Belfast improve consular access for the diaspora. Air connectivity has increased with new direct flights between Indian cities and UK hubs. Airlines like Virgin Atlantic, British Airways, IndiGo and Air India expanded services in 2024-25. This facilitates business, tourism and people-to-people contact.

Questions for UPSC:

1. Critically analyse the role of diaspora communities in strengthening bilateral relations between countries, with examples from India-UK ties.
2. Explain the significance of Free Trade Agreements in global economic diplomacy and their impact on developing economies, with reference to the India-UK FTA.
3. What are the challenges and opportunities in defence cooperation between emerging economies and developed nations? Discuss with examples of India-UK defence collaboration.
4. Comment on the importance of educational and research partnerships in encouraging innovation and bilateral ties. How do such collaborations influence national development strategies?

Answer Hints:

1. Critically analyse the role of diaspora communities in strengthening bilateral relations between countries, with examples from India-UK ties.

1. Indian diaspora forms about 2.6% of UK population, contributing to economy, academia, literature, science, business, and politics.
2. Over 65,000 UK companies owned by Indian diaspora, generating jobs, economic growth, and tax revenues.
3. Acts as a living bridge facilitating cultural exchange, trade, and people-to-people connectivity.
4. Enhances bilateral trust and soft power through community engagement and political influence.
5. Supports business linkages and investment flows between India and the UK.
6. Diaspora-driven initiatives often complement formal diplomatic and economic agreements, strengthening overall ties.

2. Explain the significance of Free Trade Agreements in global economic diplomacy and their impact on developing economies, with reference to the India-UK FTA.

1. FTAs reduce tariffs and non-tariff barriers, enhancing market access for goods and services.
2. India-UK FTA provides duty-free access to ~99% of Indian exports by value, boosting MSMEs and employment.
3. Facilitates diversification of export sectors – textiles, leather, engineering, IT, financial and professional services.
4. Strengthens economic ties between two large economies, projected to double bilateral trade by 2030.
5. Encourages foreign direct investment and technology transfer, promoting industrial growth.
6. Acts as a diplomatic tool to deepen strategic partnerships and economic resilience amid global uncertainties.

3. What are the challenges and opportunities in defence cooperation between emerging economies and developed nations? Discuss with examples of India-UK defence collaboration.

1. Opportunities include joint development, co-production, and technology sharing (e.g., jet engines).
2. Collaborations enhance military interoperability, capability building, and strategic trust.
3. Challenges involve balancing technology transfer, intellectual property rights, and security concerns.
4. Differences in defence procurement policies and bureaucratic processes can delay projects.
5. India-UK Defence Industrial Roadmap promotes Make in India, SME exchanges, joint exercises, and education.
6. Defence ties also open avenues for global market access for co-developed products.

4. Comment on the importance of educational and research partnerships in encouraging innovation and bilateral ties. How do such collaborations influence national development strategies?

1. Educational exchanges (170,000 Indian students in UK) encourage skills development and cultural understanding.
2. Mutual recognition of degrees and establishment of foreign campuses (e.g., Southampton in Gurugram) ease academic mobility.
3. Scholarship and work schemes (Chevening, Young Professionals) promote talent exchange and career growth.
4. Research collaborations focus on cutting-edge fields – quantum tech, AI, clean energy, pandemic preparedness.
5. Such partnerships attract FDI, boost innovation ecosystems, and align with national goals like Vision 2035.
6. They strengthen bilateral relations by building long-term people-to-people and institutional linkages.