In a major boost to India’s international trade, the country has finalized a comprehensive Free Trade Agreement (FTA) with the United Kingdom, making it one of the most significant bilateral trade pacts post-Brexit. This long-anticipated deal is expected to significantly boost Indian exports, attract investment, and deepen economic ties between the two nations.
Key Highlights of the FTA
Announced on May 6, 2025, the India–UK Free Trade Agreement eliminates or reduces tariffs on a wide range of goods and services, with a focus on:
Indian Exports: 99% of India’s exports to the UK will become duty-free. This includes key sectors like textiles, garments, jewellery, rice, tea, leather, and processed food.
British Exports to India: In return, India has agreed to reduce tariffs on 90% of UK goods, such as whisky, automobiles, and medical devices.
One of the most notable changes is the reduction in whisky tariffs from 150% to 40% over the next decade and the cut in car tariffs from over 100% to just 10%.
Economic Impact
The agreement is expected to:
Boost bilateral trade by £25.5 billion (approx. $34 billion) by 2040.
Add £4.8 billion annually to the UK economy, as per a UK government estimate.
Increase wages in the UK by £2.2 billion in the long term.
Create new export opportunities for Indian SMEs, especially in textiles, agriculture, and gems & jewellery sectors.
For India, the FTA offers greater market access to high-value UK markets with zero-duty advantages. It also reduces non-tariff barriers through regulatory cooperation and simpler customs procedures.
Strategic Significance
This is the first major FTA signed by the UK post-Brexit with a large emerging economy and demonstrates the UK’s pivot to building trade relations outside the EU. For India, it strengthens ties with one of its oldest economic partners and counters the influence of China in global trade blocs.
The FTA also paves the way for smoother services trade and movement of professionals, including visas for Indian IT workers, healthcare professionals, and students under relaxed norms.
Industry Response
Indian industry leaders have welcomed the deal:
FICCI called it “a transformative moment” for India’s textile and leather exporters.
The Gems and Jewellery Export Promotion Council expects a surge in demand for Indian gold and diamond jewellery in the UK.
Auto components manufacturers see this as a gateway to expand presence in Europe.
What's Next?
The agreement is expected to come into force by September 2025, after ratification by both parliaments. Meanwhile, exporters are preparing to recalibrate supply chains and pricing models to leverage the duty-free benefits.
Both countries are also working on follow-up dialogues around green energy, digital trade, intellectual property rights, and investment protection agreements.
Conclusion
The India–UK Free Trade Agreement is a game-changing step that not only boosts Indian exports but also cements a strategic trade partnership in the post-pandemic, post-Brexit global economy. As the agreement comes into effect, Indian businesses — especially MSMEs — stand to benefit from enhanced market access, making this a defining moment in India’s global trade journey.
For more information, visit https://www.indiratrade.com/