British Prime Minister Keir Starmer's  two-day visit to India this week marks a defining moment for the ties between the two countries, with both sides agreeing to deepen cooperation on trade, defense and technology.  

It was Starmer's first official trip to India since taking office in July 2024. The timing of the visit appears to be significant, as it comes amid tensions between India and the US after the Trump administration decided to impose high tariffs on Indian goods.

Indian Prime Minister Narendra Modi and Starmer said their talks on Thursday focused on efforts to ratify the new trade deal signed during the Indian premier's visit to London in July. In addition to the trade accord, labeled the Comprehensive Economic and Trade Agreement (CETA), both leaders also agreed to boost cooperation in digital infrastructure, technology, defense, critical minerals and education.

Additionally, with India seeking to modernize and revamp its military, the two countries reached a multimillion-dollar deal that will allow Britain to supply UK-manufactured lightweight missiles, launchers and electric-powered engines for naval ships to the world's most populous country.

What did Modi and Starmer say?

At a joint press meet in Mumbai on Thursday, Starmer told reporters that the agenda included new trade corridors, boosting job creation, and facilitating deep business and academic ties.

"We are creating a new, modern partnership focusing on future," said Starmer, accompanied by a 125-member delegation that includes business, university and culture sector leaders.

"That is why we struck the UK-India Comprehensive Economic and Trade Agreement in July, a breakthrough moment — years in the making, slashing tariffs, increasing access to each other's markets to drive growth and create jobs for our people," he UK prime minister added.

Modi, for his part, said both countries "are natural partners" and that "India's dynamism and the United Kingdom's expertise together create a unique synergy."

The trade deal CETA "will reduce import costs between the two countries, create new employment opportunities for youth, boost trade, and benefit both our industries and consumers," according to Modi.

Trump tariffs motivate India and UK to work together

The trade pact took three years of intermittent talks between Indian and British negotiators. In recent months, however, both sides apparently hastened their efforts to reach an agreement amid the tariff turmoil unleashed by US President Donald Trump.

The India-UK deal reduces tariffs on goods ranging from textiles to whiskey and cars.

India, one of the world's biggest whisky markets, will slash levies on whisky and gin from 150% to 75%, and the tariffs are set to be cut even further — to 40% — by the tenth year of the deal. New Delhi will also cut tariffs on cars to 10% from over 100% at present.

On the other side, 99% of Indian exports to the UK will face zero tariffs. Notably, Britain will remove a tariff on textile imports, benefiting India's large garment industry.

"The Indian market will also be opened to UK goods but this is spread over a decade and the agreement also includes provisions for labor mobility and social security exemptions, which will improve the cost effectiveness of Indian talent," Anil Wadhwa, a former Indian diplomat, told DW.

"Diversification will certainly help the Indian economy in mitigating headwinds from one partner or more and to maintain a steady channel of exports expansion," he added.

'A pivotal moment'

The British government announced in July that the deal would raise two-way trade by a further $34 billion (€29 billion) by 2040.

This week, Starmer's office said that 64 Indian companies would collectively invest 1.3 billion pounds ($1.75 billion) in Britain.

"The India–UK FTA marks a pivotal moment as it deepens cooperation across economic, technological, and strategic domains," C. Raja Mohan, visiting professor at Singapore's Institute of South Asian Studies, told DW.

"This deal could also help India cushion the blow from US tariffs and trade frictions by offering robust alternative market access, a buffer against emerging headwinds from Washington," he added.

Gulshan Sachdeva, a professor of European Studies at New Delhi's Jawaharlal Nehru University, echoed this view.

"In a rapidly evolving global geopolitical environment and amid the near collapse of the multilateral trading system, the trade agreement between the two major economies holds particular significance," he told DW.

India and the UK, the world's fifth- and sixth-largest economies respectively, have expressed their intention to ratify the deal and bring it into effect within the next year.

"The India-UK FTA is timely and strategic," said Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India (ACMA), which represents over 1,100 auto parts makers in the country.

"As global trade realigns, it offers India a valuable diversification route — strengthening supply chains, boosting technology collaboration, and opening fresh export avenues for our auto component industry," he pointed out.

"Against the backdrop of current India-US trade headwinds, this [India-UK] partnership not only mitigates risk but also reinforces India's position as a trusted and competitive manufacturing hub."

A template for a deal with EU

Sachdeva said the India-UK trade deal "could also become a template" for a free trade deal between the EU and India.

New Delhi and Brussels relaunched trade negotiations in 2022, and these talks too have gained pace since Trump's tariff disruption forced both sides to bolster and diversify their trade alliances.

Sticking points remain, however, with the EU demanding steep duty cuts on vehicles, medical devices, wine, spirits and dairy products, while India is pressing for greater access for its textiles, pharmaceuticals, steel and petroleum products.

At the same time, the UK deal has India crossing "several of its traditional red lines, including opening the automobile sector and government procurement," said Sachdeva.

"Due to the downturn in India-US relations, Europe's importance has grown. Although there is still hope for an India-US trade deal, trust is gone. So, the possibility of diversifying exports to other markets, particularly Europe, is being seriously discussed," he underlined.

Foreign policy expert Raja Mohan said India is "navigating both new challenges and fresh openings" in an increasingly turbulent geopolitical and economic landscape.

Against this backdrop, New Delhi is "leveraging Europe's strategic pivot to expand its own agency as ties with the US become more transactional and less assured."

Edited by: Srinivas Mazumdaru