Winning Bizness Desk

Mumbai.The India-UK Free Trade Agreement (FTA) came into force on Thursday, marking a major milestone in economic ties between the two countries and paving the way for lower prices on a range of British products in India while opening the UK market wider for Indian exporters. The agreement, signed in July 2025 after more than three years of negotiations, is expected to double bilateral trade to around $120 billion by 2030 and create fresh opportunities across manufacturing, services and agriculture.

India will now enjoy zero-duty access for 99% of its exports to the UK, while the average tariff on British imports into India will fall sharply to around 3%. The pact is expected to strengthen supply chains, improve market access and encourage greater investment between the two economies. Ahead of the rollout, British High Commissioner to India Lindy Cameron described the agreement as a "historic moment" that would usher in a new era of growth for both countries.

Lower tariffs to cut consumer prices

Indian consumers are expected to benefit from lower prices on several premium British products as import duties are reduced in phases over the coming years.

Key products likely to become cheaper include:

• Scotch whisky and gin, with tariffs falling from 150% to 75% initially and further to 40% by the tenth year of the agreement.
• Luxury vehicles, including Jaguar Land Rover and Rolls-Royce models, where tariffs could reduce from 100% to as low as 10% under a quota system, making some cars 20-30% cheaper.
• Imported food products such as salmon, lamb, chocolates, biscuits and soft drinks.
• Cosmetics, medical devices and aerospace components as average tariffs decline significantly.
• British fashion labels, footwear, homeware, furniture and selected electronic products.

The agreement was signed on July 24, 2025, by Union Commerce Minister Piyush Goyal and UK Business and Trade Secretary Jonathan Reynolds in the presence of Prime Minister Narendra Modi and British Prime Minister Keir Starmer after nearly 14 rounds of negotiations spread over three years.

Major boost for India's export sectors

The biggest gains are expected on the export front as Indian goods receive duty-free entry into one of the world's largest consumer markets. Several labour-intensive industries are expected to expand production and employment.

Major beneficiary sectors include:

• Textiles and home furnishings, where earlier UK duties of 8-12% have been removed, improving India's competitiveness against Bangladesh and Vietnam.
• Gems, jewellery and leather goods, providing a significant boost to MSMEs and premium exporters.
• Engineering goods, machinery and auto components from manufacturing hubs such as Pune, Chennai and Gurugram.
• Pharmaceuticals and medical devices, with simplified registration expected to help Indian generic medicines enter the UK's National Health Service more easily.
• Basmati rice, tea, spices and marine products, benefiting producers in Assam, Gujarat, Kerala and West Bengal.
• Chemicals and speciality materials, particularly from Gujarat and Maharashtra.
• Renewable energy and clean technology through increased collaboration in solar power, green hydrogen and electric vehicle infrastructure.

Economic impact expected across industries

The agreement is expected to accelerate India's export growth, generate employment and attract fresh foreign investment. Sectors such as textiles and leather, which are labour-intensive, are likely to create thousands of new jobs, while nearly six crore micro, small and medium enterprises (MSMEs), which contribute about 40% of India's exports, are expected to gain access to larger overseas markets and improved profit margins.

British companies are also expected to increase investments in India's information technology, financial services, advanced manufacturing and green technology sectors. Officials believe the agreement will help India achieve its long-term trade expansion goals while strengthening bilateral economic cooperation and integrating domestic industries more deeply into global supply chains.

Talks began in 2022 after years of planning

Formal negotiations for the India-UK Free Trade Agreement began on January 13, 2022, and concluded after nearly three-and-a-half years of discussions. Since 2014, India has signed similar trade agreements with Mauritius, the UAE, Australia and the European Free Trade Association (EFTA), while negotiations with the European Union are continuing.

Key takeaways from the agreement:

• Around 99% of Indian exports will now enter the UK duty-free.
• Average tariffs on British imports into India will reduce to around 3%.
• Bilateral trade is projected to reach $120 billion by 2030.
• The agreement is expected to boost exports, investment, manufacturing and employment.
• It is also expected to deepen long-term strategic and economic ties between India and the United Kingdom.