The recent trade deal between the world’s fifth (India) and sixth (UK) largest economies has been a long time coming – but it seems likely to have been worth the wait. Prime Minister Sir Keir Starmer has called it the “biggest and most economically significant” trade deal since Brexit that would boost the economy by £4.8 billion.

Natural partners
Indian premier Narendra Modi said that the two countries were “natural partners” and predicted that new energy would be injected into their service sectors, particularly technology and finance.

Market access
Total trade in goods and services between the UK and India was over £40 billion in 2024. India’s demand for global imports is estimated to increase to £2.8 trillion by 2050, making it the third largest importer in the world. The trade agreement’s improved market access and reduced regulation are expected to create major opportunities for UK businesses and consumers.
The FTA with India:

  • removes or reduces tariffs on 90 per cent of tariff lines. This includes key UK exports such as whiskies and gin from 150 per cent to 75 per cent at entry into force and 40 per cent over further staged reductions. Similarly, UK car manufacturers can benefit from a quota reducing the tariff from up to 110 per cent to 10 per cent
  • minimises customs-related administrative burdens for traders and commits UK and India’s customs authorities to endeavour to release goods from customs control within 48 hours, if all requirements have been met
  • reduces technical barriers to trade by making it simpler for UK manufacturers to test their products against Indian rules
  • guarantees access for the UK’s services industry. The agreement ensures a range of sectors such as financial services, environmental services and construction services are treated fairly when providing services in India
  • secures commitments on digital trade to promote digital system compatibility and paperless trade. This will help UK businesses of all sizes by making trade cheaper, faster, easier and more accessible
  • will set up bespoke support for SMEs such as dedicated contact points, helping them as they enter the market and trade with India
  • maintains the UK’s high standards on important consumer issues such as food standards and animal welfare. On food standards, all food and drink products imported into the UK will continue to have to comply with UK import requirements
  • will support the UK’s climate and environment goals and support cooperation and trade in key UK growth sectors such as clean energy, transport, recycling, as well as the circular economy
  • contains commitments on areas India has never previously included in trade agreements such as gender equality – something the LCCI has lobbied for.

Projections
Tariff reductions, combined with a reduction in regulatory barriers to trade between the UK and India are estimated to:

  • increase UK exports to India by nearly 60 per cent in the long run –equivalent to an additional £15.7 billion of UK exports to India when applied to projections of future trade in 2040
  • increase UK imports from India by 25 per cent in the long run –equivalent to £9.8 billion in additional UK imports from India when applied to projections of future trade in 2040. UK consumers can benefit from cheaper and more varied access to goods and services from India
  • increase bilateral trade by nearly 39 per cent in the long run, equivalent to £25.5 billion a year.