India UK Free Trade Agreement: Key Takeaways!

India UK Free Trade Agreement:

The India UK Free Trade Agreement (FTA) marks a significant step in strengthening bilateral economic ties between the two nations. Aimed at boosting trade, investment, and job creation, the agreement covers a wide range of sectors including textiles, engineering goods, pharmaceuticals, and services, while also providing relief in social security contributions for Indian professionals in the UK. With total trade between India and the UK reaching £42.6 billion in 2024, this FTA is expected to further enhance economic cooperation and open new opportunities for exporters and businesses on both sides.

Delighted to speak with my friend PM @Keir_Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our…
— Narendra Modi (@narendramodi) May 6, 2025

India & Free Trade Agreements: (FTAs with other countries)

India has signed Free Trade Agreements (FTAs) with approximately 54 individual countries. These agreements also include bilateral trade deals, such as Comprehensive Economic Partnership Agreements (CEPAs) and Comprehensive Economic Cooperation Agreements (CECAs), with about 18 groups or countries.
Bilateral FTAs: India has signed FTAs with countries like Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, South Korea, Japan, Australia, UAE, and Mauritius.
Regional FTAs:-India is also a party to agreements like the India-ASEAN CECA (Comprehensive Economic Cooperation Agreement)
Other Agreements: India also participates in agreements like the SAFTA (South Asian Free Trade Area).

Key Takeaways from India UK Free Trade Agreement:

UK Commitments:

UK’s Tariff Commitments: 99% Indian Exports at Zero Duty

Under the India–UK Free Trade Agreement (FTA), the UK has committed to provide zero-duty access for 99% of Indian exports. This is a historic concession that will boost India’s export potential across a wide array of sectors. Major beneficiaries include textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, and strategic industrial sectors such as engineering goods, auto parts and engines, and organic chemicals. This move is expected to significantly enhance India’s trade competitiveness in the UK market.

Boost for Services Trade

The agreement provides a strong push for India’s service industry, particularly in high-value segments like Information Technology (IT), IT-enabled Services (ITeS), financial services, professional services, business consulting, and educational services. It aims to simplify regulatory procedures, enhance transparency, and improve ease of doing business for Indian service providers in the UK — one of the largest global services markets.

Social Security Exemption: Major Win for Indian Companies

One of the standout provisions of the FTA is the three-year exemption from UK social security payments for Indian employees temporarily assigned to the UK. Previously, Indian companies had to make dual social security contributions — in both India and the UK — when sending employees on assignment. This exemption will substantially reduce the cost of deploying Indian professionals to the UK, especially from IT and consultancy firms, making Indian businesses more competitive.

India’s Commitment:

India’s Tariff Reductions on Key UK Exports

As part of its commitments under the India–UK FTA, India has agreed to significantly reduce import duties on select high-value British products, particularly in the alcoholic beverages, cosmetics, and medical devices sectors — areas that have long been a priority for UK exporters.

Whisky, one of the UK’s flagship exports to India, has seen tariffs slashed from 150% to 40% under a phased schedule and within a defined import quota. This is expected to make premium UK whisky brands much more competitive and accessible to Indian consumers, boosting UK spirits exports substantially.
Cosmetics and personal care products from the UK will also benefit from major tariff cuts, facilitating greater entry of British brands into India’s rapidly growing beauty and wellness market.
Medical devices and diagnostic equipment, another key export category for the UK, will see duty reductions aimed at supporting India’s healthcare infrastructure while ensuring affordable access to cutting-edge technologies.

PREVIOUS NOTES