With a significant calibration in the process of legal scrubbing of the India-UK free trade agreement (FTA) text setting the stage for signing of the agreement by the end of July, as indicated by the presence of Commerce Secretary Sunil Barthwal in London to meet UK Secretary of State for Business and Trade Jonathan Reynolds and other British senior officials, expectations are riding high on removal of taxes on the export of labour-intensive products such as leather, footwear and clothing, while making imports of whisky and cars from Britain cheaper.
The bilateral trade between India and the UK increased to USD 21.34 billion in 2023-24 from USD 20.36 billion in 2022-23. Britain is the sixth-largest investor in India. The country has received USD 35.3 billion FDI during April 2000 and September 2024. The FTA is further expected to increase investment of UK Businesses in India and vice versa.
What the FTA will underline is a bid to double trade between the two economies to USD 120 billion by 2030. Since the conclusion of the negotiations by the two countries on 6 May 2025, after three years of fractured negotiations between the world’s fifth and sixth-largest economies, there have been varying perceptions on what the deal can deliver. The overriding interest is in seeing the accomplishment of the goal of doubling bilateral trade to USD 120 billion by 2030, which can drive job creation, investment, and long-term industrial competitiveness. The signing of the pathbreaking India-UK FT, along with the Double Contribution Convention, underscores the need for enhanced trade and investment opportunities amidst the current global trade environment laced with uncertainties. The idea gaining currency is an FTA that goes beyond tariff reductions and seeks to build a forward-looking partnership rooted in shared prosperity, trust, and innovation. “The landmark India-UK FTA marks a major stride in strengthening economic ties between the two nations,” says Chandrajit Banerjee, Director General, CII. “It is set to catalyse cross-sectoral trade, boost investor confidence, and unlock significant opportunities for Indian industry, particularly for MSMEs,” he foresees.
Interestingly, the FTA comes amidst the unveiling of the UK’s modern industrial strategy focusing on 8 sectors where the UK is already strong and there’s potential for faster growth — advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services. It also comes as India gets on track to become a $5 trillion economy by 2027, supported by strong macroeconomic fundamentals, bold reforms, and robust infrastructure and technology investments. The UK, with its globally integrated economy, innovation ecosystem, and export capabilities, remains a vital trade partner.
This FTA enables businesses on both sides to harness complementary strengths and accelerate shared economic growth. As part of the UK’s modern industrial strategy, each growth sector has a bespoke 10-year plan that will attract investment, enable growth, and create high-quality, well-paid jobs. The strategy is set to unlock billions in investment and support 1.1 million new well-paid jobs over the next decade with a 10-year plan to boost investment, create good skilled jobs and make Britain the best place to do business by tackling two of the biggest barriers facing UK industry – high electricity prices and long waits for grid connections. Moreover, the strategy offers a 10-year plan to promote business investment and growth and make it quicker, easier and cheaper to do business in the UK, giving businesses the confidence to invest and create 1.1 million good, well-paid jobs in thriving industries – delivering on the government’s Plan for Change.
British Prime Minister Keir Starmer calls it a “turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past. “In an era of global economic instability, it delivers the long-term certainty and direction British businesses need to invest, innovate and create good jobs that put more money in people’s pockets as part of the plan for change. This is how we power Britain’s future – by backing the sectors where we lead, removing the barriers that hold us back, and setting out a clear path to build a stronger economy that works for working people. Our message is clear – Britain is back and open for business.”
That is music to the ears of Indian industry looking to a transformative India-UK FTA, which will deepen economic ties through enhanced cooperation in technology, diversification of global supply chains and a more business–friendly environment. “The timely agreement will further help in advancing the UK-India relations guided by the 2030 Roadmap, aimed at building a comprehensive strategic partnership and deepening bilateral trade to reach USD 100 billion by 2030” says Sanjiv Puri, President, CII.
The agreement will indirectly create hundreds of thousands of jobs across both countries in key sectors. As per media agencies, UK enterprises currently support over 6,00,000 jobs in India, and this figure is anticipated to rise with increased bilateral investments facilitated by the FTA. On the other side, Indian companies have generated employment and new jobs in the UK over the past three years. This FTA is expected to further bolster the trend by encouraging more Indian investments. In 2024, there were 971 Indian Owned companies operating in the UK, employing nearly 118,430 people, and this is expected to increase further once the agreement comes into full force. This agreement would level up businesses throughout the UK, benefiting MSMEs as well as large-scale UK exporters.
Accordingly, the FTA has unlocked benefits across a range of sectors, particularly labour-intensive industries like textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery. Key sectors such as engineering goods, auto components, and organic chemicals also stand to gain. The agreement delivers a substantial boost to services trade, including IT/ITeS, financial and professional services, business consulting, and education. It fosters deeper strategic alignment and enhances global mobility, especially for young Indian professionals, who now enjoy a three-year exemption from UK social security contributions.
There is, of course, the trade imperative. The UK is India’s major trading partner. The bilateral trade in goods and services between the two countries is currently more than US$50 billion, and with the trade agreement in place, this is expected to grow multifold in the coming years. There is no doubt that as amongst the most comprehensive deals signed by India with a developed economy, the India-UK FTA has covered a wide gamut of bilateral economic co-operation areas, giving due consideration to key asks of industry in terms of greater market access for Indian products, enhanced mobility and social security pact to avoid double contribution to social security funds have been considered in the India-UK FTA.
For Harsha Vardhan Agarwal, President, FICCI, the India-UK FTA brings a new momentum to sectors like FMCG, healthcare, and innovation-driven enterprises. “This deal will be immensely beneficial for Indian exporters looking to enhance their presence in the UK market,” says Agarwal.
Mukesh Kansal, Chairman, CTA Apparels, looks at the FTA as a landmark initiative in shaping a more dynamic and equitable global trade architecture. reflecting India’s resolute commitment to expanding its global economic footprint while advancing the interests of labour-intensive and high-growth sectors. “The removal of duties on key Indian exports such as apparel, leather, and footwear, alongside smoother access to UK products, lays the foundation for a more balanced and mutually enriching trade relationship,” says Kansal.
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