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The FTA promises significant growth for India’s processed foods, leather, engineering goods, electronics, and pharmaceutical exports. Consumers in both countries will enjoy lower prices. The deal strengthens economic ties between India and UK.
London: The Free Trade Agreement (FTA) between India and the United Kingdom was signed by Prime Minister Narendra Modi and Keir Starmer. This agreement opens a new chapter in trade and promises significant growth in key Indian sectors. It allows zero-duty access for nearly all goods and services traded, making it a major boost for India’s economy, particularly in agriculture, manufacturing, food processing, and MSMEs.
Prime Minister Narendra Modi described the signing of the India-UK Free Trade Agreement as a historic milestone in the relationship between the two nations. While speaking with UK Prime Minister Keir Starmer, he mentioned that the deal enhances market access and economic opportunities for both countries. Modi pointed out that sectors like textiles, footwear, gems and jewellery, seafood, agriculture, and MSMEs will see major benefits. He also noted that Indian consumers will have access to UK products like medical devices and aerospace components at lower prices.
Keir Starmer labelled the India-UK FTA as the largest and most important trade deal since Brexit, marking a significant agreement for India. He commended PM Modi’s leadership and stated that the deal will increase wages, create jobs, and improve living standards in the UK. Starmer emphasized that the agreement will reduce tariffs, simplify trade, lower prices for Indian goods such as clothing, footwear, and food, and add £4.8 billion to the UK economy each year. He described the deal as a symbol of a new era of stronger global partnerships.
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What is a Free Trade Agreement?
A Free Trade Agreement (FTA) is a pact between two or more countries to lower or eliminate taxes (tariffs) on goods and services traded. This makes products cheaper and easier to sell across borders. As a result, businesses can export more, economies benefit, and consumers enjoy a wider range of products at lower prices. FTAs also attract foreign investment, create jobs in sectors like manufacturing and agriculture, and encourage greater cooperation among countries. To sum it up, FTAs help improve trade, support development, and strengthen international relationships. Here are some sectors where the India-UK Free Trade Agreement is expected to provide notable benefits:
- Agriculture and Fisheries
Indian farmers are expected to gain significantly from the agreement. With duty-free access to the UK’s premium food market, exports of Indian staples like turmeric, cardamom, pepper, pulses, and processed foods like mango pulp and pickles are projected to increase by over 20% in the next three years. More than 95% of agricultural and processed food tariff lines will have zero duties, drastically lowering the landed cost of Indian products and enhancing their competitiveness in both mainstream and ethnic UK retail chains.
The FTA will also support the export of high-value crops such as jackfruit, millets, vegetables, and organic herbs, encouraging Indian farmers to diversify and better handle price fluctuations. Sectors like dairy, apples, oats, and edible oils have been excluded from tariff concessions to protect domestic producers.
The fisheries sector is also set for a significant boost. Coastal states like Andhra Pradesh, Kerala, Tamil Nadu, and Odisha will benefit greatly as seafood exports—including shrimp, tuna, and fishmeal—will enter the UK duty-free, compared to current tariffs of 4.2% to 8.5%. The UK’s USD 5.4 billion marine import market presents a major opportunity for India’s blue economy.
2. Processed Foods and Plantation Products
India’s food processing sector is poised to grow under the FTA, as it currently exports only £1.5 million to the UK, which imports over USD 50 billion in processed foods. The deal also supports India’s plantation sector, helping tea, coffee, and spice exporters compete better with European countries. Indian instant coffee is expected to perform particularly well in the UK’s premium market.
India’s food processing sector is a vital part of its economy. Under the India-UK Free Trade Agreement (FTA), it receives substantial support. The sector accounts for 10.1% of the trade deal and includes 985 product categories (tariff lines). While India exports over USD 14 billion worth of processed foods globally, only about £1.5 million goes to the UK. This indicates a significant opportunity to increase exports to the UK with the new agreement.
The FTA also aids India’s plantation sector, especially products like coffee, tea, and spices. These items can now enter the UK market without import duty, making them more affordable and competitive. Indian instant coffee, in particular, will now better compete with European brands from Germany and Spain in the UK’s premium market. This offers Indian farmers and exporters a chance to earn more and expand their market presence.
3. Leather and Footwear
India’s leather and footwear exports to the UK could exceed £1.5 million under the India-UK FTA, creating major opportunities for small businesses and artisans. The deal gives Indian MSMEs duty-free access to the UK’s USD 23 billion market, providing a competitive advantage over countries like Bangladesh and Cambodia in labour-intensive sectors such as textiles, footwear, gems and jewellery, and furniture.
The FTA promotes digital tools, e-commerce, and sustainable practices. Stronger protection for intellectual property rights and geographical indications will help traditional Indian products gain global recognition. Increased exports are expected to enhance production, create jobs in areas like Tirupur and Kanpur, and improve incomes. India is now positioned to become a leading supplier of textiles, leather, and footwear to the UK. MSMEs in other sectors like agriculture, pharmaceuticals, electronics, and chemicals will also benefit from the agreement.
4. Engineering, Electronics, and Pharmaceuticals
India’s trade deal with the UK will boost exports of engineering goods like machines and equipment, which already grew by 11.7% last year. Electronics such as smartphones and fiber cables will also see growth. Indian software companies are expected to expand rapidly, with exports likely reaching USD 32 billion this year. The agreement also creates significant opportunities for India’s medicine exports, as the UK purchases a considerable amount of medicines, though it currently imports less than USD 1 billion from India.
The chemicals sector, which includes products like fertilizers and industrial chemicals, has a large share in the deal. India currently exports about £1.5 million worth of chemicals to the UK. With the FTA, this could grow by 30-40%, reaching £550-750 million by 2025-26.
5. MSME and Women Entrepreneurs
The FTA aims to strengthen India’s MSME ecosystem, which is essential for its export economy. Artisans, small manufacturers, and women entrepreneurs across India stand to benefit from easier compliance procedures, better access to trade finance, and exposure to global markets.
Women-led businesses, especially in textiles, handlooms, and footwear, are expected to flourish. Iconic products like Kolhapuri chappals, made by women’s artisan groups, will now have duty-free access to premium UK markets, boosting both income and cultural brand recognition.
Clusters in Tamil Nadu, West Bengal, Rajasthan, and Gujarat are expected to become more export-ready, as the FTA encourages the use of digital tools, e-commerce, and sustainable practices.
Boost for Make in India
The India-UK FTA covers over 90% of products and removes trade barriers on nearly all goods, marking a significant shift in India’s trade strategy. Instead of only focusing on selling large volumes, India now aims to export more high-quality, diverse, and value-added products. This will enhance the ‘Make in India’ initiative by supporting growth and increasing exports. It will also provide Indian consumers with better quality products at affordable prices. This agreement foresees stronger economic ties and shared prosperity for both countries.
India’s skilled workforce in IT, services, and education is also expected to gain from smoother access to the UK’s high-value markets under the recently signed India-UK Free Trade Agreement. A significant aspect is the three-year exemption from social security contributions in the UK, part of the Double Contribution Convention, which is seen as a substantial win for Indian professionals and employers as well.
The agreement also simplifies mobility for chefs, yoga instructors, musicians, and business visitors, reinforcing India’s goal to become a global hub for talent and cultural exchange.
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