India–UK Free Trade Agreement 2025: A New Era for Bilateral Trade and Economic Growth

Introduction

India and the United Kingdom have just signed a Free Trade Agreement (FTA) which is a big step forward in their economic relationship. Leaders from both countries are calling this deal a major step that will not only create new opportunities but enhance the partnership between both nations.

The updated list of products on which duty will become zero has been mentioned below:

Impact of the FTA

Despite trade barriers, the India-UK relationship has maintained strong. India was Uk’s 12^th largest trading partner, with bilateral trade reaching GBP 43 billion in 2024. The newly signed FTA is set to change and reshape this dynamic. Under the agreement, UK will eliminate tariffs on 99% of Indian goods, while India will reduce import duties on 90% of British imports. Majority of the UK products will become completely tariff-free over the next ten years.

This agreement builds on an already growing trade relationship. India has enjoyed a trade surplus, with the FTA in place it is expected to further accelerate this growth. According to the projections, it could add GBP 4.8 billion pounds annually to UK economy by 2040, while giving Indian businesses wide market access and easing regulatory hurdles.

Strategic Benefits for India

For India, the agreement brings several strategic advantages:

• Boost to Exports: India exporters present in various sectors will now find it easier to enter and compete in the UK market.

• Strengthening Trade Surplus: The deal helps India build on its current trade surplus, translating into higher export earnings.

• Sectoral Benefits: Industries which are labor intensive and have manufacturing competitiveness like textiles, leather, marine products, sports goods and jewellery stand to benefit the maximum

Employment and Economic Impact

The FTA is expected to generate employment across various sectors in India:

• Agricultural and Processed Foods: Tariffs will nearly be eliminated on animal products (99.3%), vegetable/oil products (99.8%), and processed foods (99.7%)

• Industrial Goods: Zero tariffs will apply to a wide range of items including minerals, chemicals, plastics, rubber, leather, wood, paper, textiles, clothing, headgear, glass, ceramics, metals, machinery, and various manufactured products

Opportunities for the UK Industries

UK industries will also enjoy considerable benefits:

• Alcohol: Tariffs on Scotch whisky and other premium spirits will be reduced from 150% to 75% initially, and further down to 40%, making the more affordable in India.

• Automotive Sector: Tariffs on UK manufactured cars like Jaguars and Land Rovers will see tariffs cut from over 100% to just 10% under a quota based system.

• Consumer Goods: Lower duties on UK exports like cosmetics, aerospace parts, lamb, medical devices, salmon, electrical machinery, soft drinks, and chocolates will help British brands access Indian consumer more easily.

Professional Mobility and Services

One of the standout features of this FTA is the support for professionals working across borders:

• Indian professionals can now work in the UK without being restricted by the current immigration point system.

• More categories such as chefs, musicians, and yoga practitioners have been added to UK’s visa pathways.

• A Double Contributions Convention ensures professionals won't have to pay social security contributions in both countries.

Service Sector Growth Opportunities

India’s strength in services is also recognized in the deal. Key areas that will benefit include:

• IT and IT-enabled services

• Financial and Professional services

• Education and Training services

Looking Forward

This agreement is more than just a trade deal. It is a new phase in the long-standing India-UK relationship. It promises to enhance trade, reduce costs and create jobs in both countries. With implementation underway, businesses and consumers can see real, on-the-ground benefits across industries from traditional manufacturing to modern service sectors.