Paper: GS – II, Subject: International Relations, Topic: India’s relations with major powers, Issue: India-U.K. relations.
Context:
British PM Keir Starmer’s visit to India (Oct 2025) marks a new phase in India–UK bilateral relations, emphasizing defence, trade, education, and innovation.
Key Highlights:
Key Agreements and Deals:
Defence Cooperation:
- Missile Deal: India signed a £350 million (€350 mn) deal to buy Lightweight Multirole Missiles (LMMs) from the UK for the Indian Army. It marks a step toward a “broader complex weapons partnership” under negotiation.
- Naval Collaboration: Both sides agreed on a £250 million deal for electric-powered engines for naval ships.
- Indian Investments in the UK: 64 Indian firms pledged £1.3 billion (₹15,430 crore) in investments in the UK. Major Investments include
- TVS Motor Co. – £250 mn in Solihull for Norton Motorcycles & EV development.
- Cyient Ltd. – £100 mn for semiconductors, clean energy, digital tech (300 UK jobs).
- U.K. Investments in India: UK universities Lancaster and Surrey receive approval to open campuses in India — supporting India’s NEP 2020 goal of globalized higher education.
The India–UK Free Trade Agreement (FTA):
- Signed earlier in 2025, it aims to reduce tariffs on goods and services.
- Expected trade growth:
- UK exports to India set to increase by 60%
- Indian exports to UK increased by 25%
Notable Feature – Scotch Whisky Tariffs:
- Import duty on Scotch whisky cut from 150% to 75% initially, enabling price stability and formal market growth.
- It spawned financial innovation. For e.g., Caledonian Malt Fund LP (Bermuda), investing in whisky casks anticipating Indian demand.
Implications:
(a) Global Stability: PM Modi termed the partnership an “important pillar of global stability”.
(b) Migration & Skilled Mobility:
- UK emerging as a friendlier destination for Indian professionals amid US H-1B visa fee hikes ($100,000 per application).
- UK offering lower visa costs, Global Talent routes, and innovation-friendly migration pathways.
Challenges Ahead:
- Bilateral Investment Treaty (BIT) is still under negotiation which is key for investor protection and dispute resolution.
- Regulatory and Sanitary Barriers: Affecting exports of mangoes, spices, marine products.
- Carbon Adjustment Mechanism (UK): Potential threat to India’s carbon-intensive exports such as steel, and cement.
- Domestic Politics: UK parliamentary approval may delay FTA implementation.
Way Forward:
- Expedite BIT finalization to boost investor confidence.
- Build mobility frameworks for skilled professionals.
- Deepen defence industrial collaboration under Atmanirbhar Bharat.
- Expand education and R&D partnerships for youth skill-building.
Conclusion:
The India–UK partnership stands at a transformative juncture, blending commerce, strategy, and innovation. This collaboration could become one of the strongest pillars of the 21st-century global partnership.
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