Indian Prime Minister Narendra Modi welcomed UK Prime Minister Keir Starmer in Mumbai on Thursday, as the two leaders hailed a new trade deal that they said could transform bilateral economic relations.

Starmer visited India's financial capital for two days, joined by some 125 leaders from Britain's business, culture and university sectors.

The welcoming by Modi comes as the Indian government increases efforts to attract global investment for the nation's rapidly growing economy.

India became the world's fifth-largest economy in 2022, according to IMF figures, and it is predicted to overtake Japan as the fourth largest later this year.

The UK is the sixth largest economy.

"This relationship matters more than ever," Starmer told reporters at a press conference. "We're opening up new opportunities in India for British businesses, opportunities that other countries simply do not have. It has given us a unique edge."

"We are creating a new modern partnership focusing on the future," Starmer said.

Modi echoed the sentiment, adding that strengthening ties between India and the UK represented "an example of stability in an uncertain world."

What's in the trade deal?

In Mumbai, Starmer said his country was doubling down on the potential of the trade deal, which is expected to take effect within a year.

Currently, India and the UK share a bilateral trade worth around $54.8 billion (€47.4 billion) and investments supporting more than 600,000 jobs across both countries.

The UK government said in a statement that the new trade deal would raise that figure by a further $34 billion, while increase exports to India by nearly 60%.

The deal would cut tariffs on products shipped to India, including cosmetics, medical devices, Scotch whisky, and English gin.

Meanwhile, the UK would slash duties on Indian clothing, footwear and food products and spices.

Under the new partnership, UK universities had been given approval to open new campuses in India.

Additonally, an Indian foreign ministry statement also said the two sides agreed cooperate on tech and innovation, with a joint centre for AI. They also unveiled a critical minerals industry guild to bolster supply chains and promote green technologies.

Edited by: Wesley Rahn