India-UK Forge Stronger Ties with Landmark FTA and Vision 2035
In a significant diplomatic and economic development, India and the United Kingdom formally signed a landmark Free Trade Agreement (FTA) on Thursday, July 24, 2025, during Prime Minister Narendra Modi's visit to the UK. The agreement, hailed as a "historic day" for India-UK relations, aims to significantly enhance bilateral trade, investment, and economic collaborations. Both nations hope the accord will boost trade by an estimated Ā£25.5 billion and double bilateral trade by 2030. The FTA will lead to tariff reductions on various goods, including British whisky and cars, and provide better market access for Indian exports such as textiles, footwear, gems, jewellery, and agricultural produce.
Beyond trade, the two Prime Ministers also adopted the "India-UK Vision 2035" document, a comprehensive roadmap designed to infuse greater ambition and momentum into their Comprehensive Strategic Partnership over the next decade. This vision encompasses key areas such as economy and growth, technology, innovation, research and education, defence and security, climate action, and people-to-people ties. Discussions also included increasing interaction between India's GIFT City and the UK's financial ecosystem, and finalizing a Defence Industrial Roadmap for co-design, co-development, and co-production of defence products.
Indian Economy Shows Resilience Amidst Policy Actions
India's economic outlook remains encouraging, with the Reserve Bank of India (RBI) projecting a real GDP growth of 6.5% for FY 2025-26, supported by strong domestic demand and government capital expenditures. Recent data indicates a "Goldilocks" phase for the Indian economy, characterized by moderate growth and subdued inflation, with retail inflation in June 2025 falling to 2.1%. This has prompted the RBI to continue its accommodative monetary policy, having already cut interest rates by 100 basis points since February 2025.
Business activity in India accelerated in July, driven by manufacturing, as the HSBC Flash India Composite PMI Output Index rose to 60.7 from 58.4 in June. The RBI's Financial Inclusion Index (FI-Index) for FY25 also showed robust growth, rising to 67 from 64.2 in FY24, reflecting improved access, usage, and quality of financial services across the country. The government is also actively engaged in negotiations for a Bilateral Trade Agreement (BTA) with the United States, aimed at enhancing market access and reducing trade barriers.
Key Government Initiatives and Regulatory Updates
The Ministry of Skill Development and Entrepreneurship (MSDE) celebrated the successful completion of 10 years of the Skill India Mission with a conference and exhibition, 'Bharat SkillNxt 2025', highlighting the mission's achievements and future collaborations. In legislative news, the National Sports Governance Bill was introduced in the Lok Sabha, proposing a board with sweeping powers to oversee sports federations.
Several new financial rules came into effect from July 1, 2025, impacting businesses and individual taxpayers. These include tightened GST return filing rules, a three-year time limit for filing past GST returns, and Aadhaar being made mandatory for new PAN cards. Furthermore, discussions around the Income Tax Bill, 2025, indicate a move towards simplifying existing tax laws and providing relief measures, including a proposal for no income tax up to Rs. 12 lakhs under the new regime.
In the energy sector, the Gorbea Solar Project, a 435 MW plant, was inaugurated in Rajasthan in July 2025. However, a recent policy change by the Indian government on July 11, 2025, exempted most coal-fired power plants from installing technology to reduce sulphur dioxide (SO2) emissions, reversing a key environmental policy from 2015.
Internationally, the International Court of Justice (ICJ) issued a landmark advisory opinion in July 2025, declaring that government actions causing climate change are illegal, urging states to act.