On July 24, 2025, India and the UK signed the Free Trade Agreement (FTA), marking a significant step towards strengthening bilateral trade relations. This deal is expected to boost both economies, offering India enhanced market access and reduced tariffs on exports, thereby positioning it as a major global exporter. Meanwhile, the UK will gain easy access to quality goods and employment opportunities.
India and the UK signed a Free Trade Agreement (FTA), aiming to boost bilateral trade and investment of approximately $100 billion by 2030. This deal was signed in London in the presence of India’s Prime Minister Narendra Modi and the British Prime Minister Keir Starmer. Narendra Modi described the agreement as “a blueprint for shared prosperity.”
Key Sectors Affected by the FTA
Textile and Apparel Industry
The UK is the hub for Indian ready-made garments due to its high demand for affordable, fast-changing fashion and the presence of over 1.5 million Indians residing in the UK. The Economic Survey (February 2025) ranks India as the 6th largest exporter of textiles. Following the agreement, India will experience duty-free access for exports to the UK. This will create more job opportunities for local weavers, artisans, and small business owners, particularly in hubs such as Tiruppur, Surat, and Ludhiana.
Pharmaceuticals
India is often referred to as the pharmacy of the world, and supplies almost 20% of the world’s affordable generic medicines globally. With over 25% of the medicines in the UK sourced from India, FTA’s tariff reduction has streamlined the procurement and promoted more R&D ventures. Both India and the UK will benefit bilaterally.
Seafood and marine products
The UK is a net importer of seafood, with almost 80% of seafood sourced from abroad. With this agreement, duties ranging from 4% to 21% will be eliminated on the major Indian seafood market. India shrimp exports are projected to rise from 26% to 35% thereby improving profit margins for Indian exporters and UK consumers to get high-quality quality affordable products.
Service Trade
The UK’s economy is predominantly service-driven, contributing almost 80% GDP from the service sector. The FTA enables access to India’s service industries, such as finance, legal, educational, professional, and IT solutions, making this a strategically vital component of the deal.
India and the UK benefit bilaterally
As per the UK’s Impact Assessment of the India-UK Free Trade Agreement, the total goods exchanged between the two countries stood at over $50 billion in 2024. By 2030, the government further aims to double the trade volume, adding almost $6.4 billion to the UK’s GDP. Business and Trade Secretary Jonathan Reynolds of the UK applauded the FTA signing, saying,” The almost £6 billion in new investment and export wins announced today will deliver thousands of jobs and show the strength of our partnership with India as we ensure the UK is the best place in the world to invest and do business.”
With India being one of the leading exporters to the UK, the British government has strategically reduced the heavy tariffs to get easy access to quality goods and services. India also strengthens its economy globally as it paves its way to becoming one of the leading exporters in the world. Commerce and Industry Minister Piyush Goyal considers the deal a critical step towards a developed India, emphasizing that the “social security agreement” included in the FTA will safeguard the Indian professionals working in the UK. The India-UK FTA represents not just a trade agreement but a strategic alignment, unlocking economic opportunities for the countries while deepening bilateral trade relations for years to come.
