India-UK FTA: Historic achievement of free trade agreement in 2025 gives new impetus to India-UK relations

London: The much-awaited free trade agreement between India and Britain was in the works for the last four years and could take shape in 2025. Along with this, ‘Vision 2035’ agreement was also agreed to give new energy to bilateral relations beyond trade and investment. Free trade agreement (FTA) negotiations were in the news for most of the year. Both sides appeared committed to finalizing the agreement and it was formally signed during Prime Minister Narendra Modi’s visit to Britain in July. Keir Starmer, who completed one year as British Prime Minister, warmly welcomed Modi at his rural residence ‘Checkers’ near London and held bilateral talks over tea.

“We have signed a historic agreement with India, one of the fastest growing economies in the world,” Starmer said. He also accepted an invitation to visit India in October with “the largest British business delegation” ever. According to analysis by the UK Department of Trade and Commerce (DBT), bilateral trade could increase from the current £44.1 billion to more than £25 billion if the Comprehensive Economic and Trade Agreement (CETA) is implemented. It is expected that the agreement will be approved by the British Parliament in the first half of 2026. “India is a rising power on the global stage and is on track to become the third-largest economy by 2028,” Starmer told Parliament.

In a year filled with high-level bilateral contacts, the two countries also outlined an ‘ambitious and future-oriented’ 10-year ‘India-UK Vision 2035’ roadmap, which sets strategic goals for long-term cooperation and innovation across sectors. The growing presence of Britain’s higher education sector in India will also bear fruit from the new year. At least nine British universities are finalizing their overseas campuses in India to meet the Indian demand for quality education. This is seen as a positive balance between Britain’s strict immigration policy. According to recent data, about 45,000 Indians on study visas and 22,000 professionals on work visas left the country, leading to a decline in net immigration there. This trend may continue with stricter rules such as increasing the waiting period for permanent residence to 10 years.

Some billionaires left the country due to the high tax system. ArcelorMittal founder Lakshmi N. Many rich industrialists, including Mittal, are preparing to relocate to low-tax countries. In many ways this year also witnessed the end of an era. Several prominent UK-based industrialists of Indian origin passed away, including hotelier Joginder Sangar, Hinduja Group co-chairman G.P. Hinduja, Caparo Group founder Lord Swaraj Paul and economist Lord Meghnad Desai. The shared commitment against terrorism also remained prominent in India-UK relations.

Britain expressed condolences over the terrorist attack in Delhi in November and called for a diplomatic solution after the Pahalgam attack in Kashmir in April. This year, the Air India flight accident from Ahmedabad to London also shocked both the countries. 241 out of 242 people died in this accident. The investigation is ongoing in India. Meanwhile, hearing on legal cases related to extradition of fugitive economic offenders wanted in India also continued. Vijay Mallya is out on bail, while Nirav Modi’s appeal has been postponed till March. Britain also used its domestic anti-terrorism law for the first time to stop funding of pro-Khalistan organization Babbar Khalsa.