India-UK FTA Likely to Unlock Extra Trade Worth £25.5 Billion
The India-UK Free Trade Agreement (FTA), which eliminates tariffs on 99% of Indian exports to the UK and 90% of UK exports to India, is expected to unlock an additional £25.5 billion in trade value, said UK Trade Commissioner for South Asia, Harjinder Kang.
Speaking during a panel discussion in Mumbai, Kang called the FTA “a blueprint for the next chapter of UK-India economic cooperation.” With £43 billion in existing bilateral trade and a projected £25.5 billion increase, the agreement promises significant gains for both manufacturing and services sectors.
Key Features of the Agreement
Kang, who also serves as the Deputy High Commissioner for Western India, outlined the next steps: legal finalisation, signing by both Prime Ministers, and ratification by respective parliaments—expected within 9 to 12 months. The FTA will be implemented in phases.
Notably, the deal includes liberalisation in services, lower auto tariffs (with quotas), and establishes a “future-ready tech-security corridor.” The agreement could potentially expand into pharmaceuticals, semiconductors, and green technology sectors.
He clarified that carbon taxes will not disrupt bilateral terms, stating that the EU’s CBAM (carbon border adjustment mechanism) is not included in the FTA—bringing relief to Indian exporters.
Whisky, Services, and Sectoral Benefits
The UK’s peak tariff on whisky, currently at 150%, will be slashed to 40% over ten years. The agreement also covers 36 sectors under Contractual Service Suppliers and 16 under Independent Professionals—including IT, R&D, chefs, yoga instructors, and musicians.
A key complementary development is the reciprocal DCC (Detachment Coverage Certificate) under negotiation. It would allow employees working temporarily (up to 3 years) in the other country to pay social security only in their home country—reducing administrative and financial burdens.
Industry Insights and Opportunities
Amisha Vora, Chairperson & MD at PL Capital, highlighted India’s current £18 billion in services exports to the UK—second only to the U.S.—and praised the FTA’s ability to boost mobility and amplify India’s soft power in IT, design, and the creative industries.
She emphasized the growing synergy between the UK’s post-Brexit push for democratic supply chains and India’s strategic engagement with rule-based economies, without sacrificing regulatory autonomy.
Anuj Agarwal, Chief Economist at Welspun Group, pointed out the untapped potential in textiles: “Despite employing 45 million people and contributing 2.3% of GDP, India’s UK textile exports are just $1.5 billion—lower than Bangladesh and Vietnam.” He believes the FTA gives India a fair shot at reclaiming lost market share, though he warned that a slow tariff reduction timeline might temper industry enthusiasm.
