India-UK FTA: How Will it Benefit India?

India-UK FTA: In a historic moment that signals a new era of economic cooperation, the India-UK Free Trade Agreement was officially signed in London on Thursday, during Prime Minister Narendra Modi’s visit to the United Kingdom. British Prime Minister Keir Starmer welcomed the Indian delegation as both leaders stood witness to the monumental deal aimed at doubling bilateral trade to $120 billion by 2030.

Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds inked the agreement, marking the culmination of years of negotiations that finally reached consensus in May 2025.

India-UK FTA: A Game-Changer for Global Trade

The India-UK Free Trade Agreement is designed to streamline and strengthen the economic corridor between two of the world’s most dynamic economies. This trade pact is expected to drastically reduce tariffs, simplify regulatory frameworks, and enhance mutual investments across a wide range of sectors including goods, services, agriculture, technology, and innovation.

One of the most remarkable aspects of this FTA is that 99% of Indian exports will now enjoy duty-free access to the UK market, while UK goods entering India will see their tariffs reduced substantially—from an average of 15% to just 3%. Such reforms pave the way for more affordable British goods for Indian consumers and larger export windows for Indian industries.

Boost for Indian Manufacturing and Agriculture

India’s export-driven sectors are set to gain significantly. Labour-intensive industries like leather, textiles, footwear, gems and jewellery, sports equipment, and automotive components will benefit from fewer trade barriers and broader international demand.

The agricultural sector, in particular, is poised for a breakthrough. Although the UK imports $37.52 billion worth of agricultural goods annually, only $811 million currently comes from India. The FTA opens new doors for premium Indian produce such as tea, mangoes, grapes, spices, and seafood, giving them a competitive edge in British supermarkets and specialty stores.

India-UK FTA: A Sip of Opportunity for Whisky and Automobiles

In reciprocal benefits, the agreement promises substantial tariff cuts on British whisky and gin, with duties halving from a staggering 150% to 75% initially, and declining to 40% over the next decade. Likewise, high-end British cars—long considered luxury imports in India—will see their import tariffs slashed from over 100% to 10%, although within a specified quota.

This will make premium British brands more accessible to Indian consumers while offering a new and lucrative market for UK manufacturers.

Empowering Services and People-to-People Exchange

Beyond goods, the India-UK Free Trade Agreement places a strong emphasis on service mobility and professional exchange. Indian yoga instructors, musicians, chefs, IT professionals, and corporate transferees will find it easier to live and work in the UK. Their spouses and children will also be granted work rights, enabling stronger family and cultural integration.

Another landmark feature is the Social Security Agreement, which ensures Indian professionals temporarily working in the UK won’t be required to pay into both countries’ social security systems—easing financial burdens and encouraging talent mobility.

Driving Economic Progress Together

The FTA encompasses crucial areas like government procurement, intellectual property rights, innovation, and digital trade—building a comprehensive foundation for economic synergy. It will also reduce tariffs on medical equipment, electrical machinery, aerospace components, cosmetics, chocolate, biscuits, and salmon, making these products more affordable in India and boosting demand.

India’s exports to the UK rose by 12.6% to $14.5 billion in 2024-25, while imports grew by 2.3% to $8.6 billion, reflecting a healthy trade relationship. In 2023-24, the total trade volume between the two countries touched $21.34 billion, up from $20.36 billion the previous year.

Next Steps and Parliamentary Approval

While the signing marks a celebratory moment, the agreement will now move to the British Parliament for ratification, a process expected to conclude within a year. Once approved, this deal is set to transform the India-UK economic narrative, fostering deeper ties, strategic investments, and mutual prosperity.

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