After three years of negotiation, the India-UK free trade agreement (FTA) was signed to encourage bilateral trade between the two nations. It is a type of comprehensive FTA with the trade boost target of a £25.5 billion increase in bilateral trade by 2040 (Source). As we know, the global trade environment is already going through uncertainties due to the increase in U.S. tariffs and geopolitical tensions. In the current scenario, this trade pact creates a win-win situation for both economies. Especially for Indian SMEs and exporters, this gives access to a high-value developed market like the UK. It’s an economic and strategic breakthrough that will impact how we trade, work, and do business.
Let’s move ahead and explore what this agreement means for businesses, which sectors will benefit the most, and what opportunities it brings for importers and exporters alike.
What is the India-UK FTA?
Needless to say, trading products and services among countries is a common practice. But governments often impose tariffs and trade barriers to secure their local businesses. However, on the basis of having a close relationship, two countries can discuss and ease those barriers anytime they want. And that is called Free Trade Agreement (FTA), which means lower tariffs, less red tape, and more trading opportunities between two countries.
Since 2004, India’s export market has grown significantly. Today, India exports more than it actually imports from the UK. To keep the momentum going, India signed an FTA with the UK government. Here are the key highlights of this historic deal.
- Tariff Reductions and Greater Market Access
- Duty-free access to 99% of Indian exports, benefiting sectors like textiles, footwear, jewellery, engineering goods, toys, marine products, and more.
- Reduced tariffs on UK goods such as beverages (gin and scotch whisky), soft drinks, cosmetics, luxury vehicles, medical supplies, aerospace equipment, etc.
- However, India preserves tariffs on certain sensitive products where it matters, to protect Indian farmers from unfair competition and cheap imports. These items include: dairy products, apples, oats, cheese, animals and vegetable oils, and other industrial goods like plastics, smartphones, optical fibres, cables, base stations, silver, television camera tubes, and diamond.
- Mobility of Professionals and Eased Visa Norms
- Extension of the new ‘Young Professionals Scheme’ to allow more Indian scholars to live and work in the UK.
- The liberalisation of services for Indian IT, legal, education, and financial sectors.
- Social Security Agreement
- Up to three years of social security exemption for Indian professionals who are working in the UK and vice versa, under the Double Contribution Convention.
- Investment and Intellectual Property
- Robust investment protection mechanisms and agreement on intellectual property rights for software, pharma, AI, and films.
- SMEs Empowerment and Sustainability
- Special provisions to support startups and digital trade, along with data flow assurances.
- Faster customs clearance and simplified regulatory procedures in selected sectors to empower SMEs.
- More focus on green technology and climate-resilient trade.
For the UK, this is their third biggest agreement, following the ones with Australia and Japan. After losing easy access to the EU’s single market, the UK was already looking for new trade opportunities. Given the fact that India is now on its way to becoming the fourth-largest economy, this deal couldn’t have been more beneficial for the UK’s own economy.
Which Sectors will Benefit the Most?
- Textiles & Garments: Up to 12% of tariff elimination on textiles will give Indian exporters a competitive edge in the UK market.
- Agri & Marine Goods: The export of products like rice, mangoes, tea, spices, and more is likely to grow exponentially.
- Leather & Footwear: Enhanced market access for the footwear industry shows huge potential for small and mid-sized exporters.
- Pharmaceuticals: It brings a great prospect for the Indian pharma sector to become the ‘Pharmacy of the world’ with regulatory approvals.
- Gems & Jewellery: Reduced customs duties on Indian craftsmanship will play a big role in its export growth.
- IT Services: Smoother visa rules and increased mobility will give a boost to Indian IT companies.
- Automotive Components: Tariff reductions will increase the export of Indian auto parts in the UK market.
India-UK Trade Dynamics Over the Years
The goal of this India-UK free trade agreement is to double bilateral trade by 2030.
How FTA Impacts Indian Export-Import Businesses?
It is clear that the India-UK FTA is a great diplomatic and economic milestone for both nations, especially during shifting global trade dynamics. It allows deeper global integration for Indian export-import businesses, giving a much-needed boost. Let’s find out how this comprehensive deal impacts and profits the Indian trade scenario.
- Faster Market Entry:
The FTA aims at simplifying non-tariff barriers. Such barriers are often responsible for decelerating international transactions. Enhanced customs cooperation is likely to streamline import and export processes, thus creating a more competitive and open market. Not only does it reduce delays, but it also gives faster market access for industrial goods. - Higher Profit Margins:
Tariff reduction means less input cost and high-profit margins for Indian exporters, especially SMEs. It is a great opportunity to gain access to a high-income market with reduced barriers. On the other hand, UK companies can take advantage of India’s large consumer base. - Increased Buyer Interest:
This deal will result in increased buyer interest from UK importers. Indian exporters can tap into it and grow their business. It’s the most favourable time for export businesses to broaden their trade horizon across industries and look for potential buyers. - Simplified Compliance:
The free trade agreement also promotes the mutual recognition of standards. This means fewer rejections as well as compliance costs for businesses in the export sector. Not only does it simplify compliance, but it also eases regulatory burdens that restrain mid-sized exporters. - Strategic Advantage:
Strategically, for India, the FTA will strengthen ties with major G7 economies, allowing export businesses to diversify. Moreover, by facilitating the export of services, it supports Indian initiatives like ‘Digital India’ and ‘Make in India’. In addition, the deal enhances India’s credibility and position as a serious trade negotiator for better prospects.
Explore the Opportunity and Grow: How can go4WorldBusiness Help?
Whether you are an Indian exporter targeting the UK market or a UK-based importer looking for Indian suppliers, go4WorldBusiness.com is your go-to B2B global trade partner. Here’s how we support you in making the most of the India-UK Free Trade Agreement:
- Find Verified buyers in High-Potential Sectors:
From agri-products and textiles to auto components, the platform gives you access to reliable UK buyers actively sourcing from India. Get verified, premium leads, especially in key sectors, to benefit from the FTA and take advantage of new competitive pricing. - Access Real-Time Demand for Export-Ready Products:
Our B2B platform makes product discovery easy for exporters and importers alike. With trade barriers set to be lowered, you can track the products in demand in the UK market and diversify your offerings. - Scale Your Cross-Border Business:
With features like automated match-making, enhanced product visibility, and customizable RFQs (request for quotations), our trusted platforms help you communicate and close deals seamlessly to scale faster in the post-FTA landscape. You can easily chat with your potential buyer. Besides, go4WorldBusiness is your ultimate guide, providing you with valuable insights needed to thrive in the global trade terrain.
Final Thoughts
The FTA is set to strengthen the India-UK relationship. Though the deal will take more than a year to implement, the future belongs to those who prepare and position themselves at the front. For exporters, it levels the playing field with greater market access. On the other hand, for importers, it opens doors to quality goods at a more competitive price rate and new sourcing possibilities in important sectors, as discussed. Trade businesses now need to move strategically to lead in this evolving landscape. And the go4WorldBusiness is here to guide you every step of the way, from offering insights to verified leads.
References:
https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary
https://www.deccanherald.com/business/explained-india-uk-free-trade-agreement-3534435
