India-UK Free Trade Agreement to Unlock £25.5 Billion in Trade Gains, Say Officials
New Delhi : The India-UK Free Trade Agreement (FTA), hailed as a landmark pact between two of the world’s largest democracies, is set to eliminate tariffs on 99% of Indian exports to the UK and 90% of UK exports to India, potentially unlocking an additional £25.5 billion in bilateral trade, according to UK Trade Commissioner for South Asia, Harjinder Kang.
Speaking during a panel discussion, Kang called the agreement “a blueprint for the next chapter of UK-India economic cooperation.” He noted that with £43 billion in existing trade and the projected upside of £25.5 billion, the deal would open “real gains” for manufacturers and service providers in both countries.
Kang, who also serves as the Deputy High Commissioner for Western India, outlined the next steps in the agreement’s rollout: legal scrubbing, signing by both Prime Ministers, parliamentary ratification within 9–12 months, and a phased implementation.
Key highlights of the FTA include:
Tariff Elimination: 99% of Indian goods to the UK and 90% of UK goods to India will become tariff-free.
Whisky Tariffs: The UK’s peak tariff on whisky exported to India will be reduced from 150% to 40% over a 10-year period.
Services Liberalisation: The agreement covers 36 sectors under Contractual Service Suppliers and 16 under Independent Professionals, including IT, R&D, chefs, yoga instructors, and musicians.
Tech-Security Corridor: A forward-looking provision for cooperation in technology and cybersecurity.
Social Security Coordination: Both nations will negotiate a reciprocal Detached Country Certificate (DCC), allowing employees temporarily working in the other country for up to three years to continue contributing to social security systems in their home country.
Exclusion of CBAM: The carbon border adjustment mechanism (CBAM) is not included in the FTA, safeguarding Indian exporters from carbon tax burdens under this agreement.
Kang also hinted at potential future collaboration in high-growth sectors such as pharmaceuticals, semiconductors, and green technology.
Positive Response from Indian Industry
Amisha Vora, Chairperson and MD of PL Capital, emphasized the services dimension of the FTA, noting India’s $18 billion in annual services exports to the UK second only to the US. “Increased mobility for Indian IT, creative, and professional talent enhances our soft power and export strength,” she said. Vora also noted that 72% of India’s exports to the UK such as electronics, fuels, chemicals, textiles, and apparel already generate a trade surplus, setting the stage for a meaningful upside in sectors like auto components and engineering goods.
From a macroeconomic perspective, Vora framed the deal as part of two decisive shifts: Britain’s post-Brexit diversification away from China toward democratic economies, and India’s effort to engage with like-minded countries while preserving its regulatory autonomy.
Textile Sector Stands to Gain
Anuj Agarwal, Chief Economist at Welspun Group, highlighted the untapped potential in the textile sector, which contributes 2.3% to India’s GDP and employs over 45 million people. “Despite this, our UK exports are just $1.5 billion far below countries like Bangladesh and Vietnam. This FTA gives us a fair chance to reclaim market share,” he said, cautioning that the pace of tariff reductions will be critical in sustaining industry enthusiasm.
As both nations move toward ratification and implementation, the India-UK FTA is being seen as a strategic step forward in forging resilient, rules-based economic ties amidst evolving global trade dynamics.
