India-UK FTA makes India an attractive destination for UK investors

India may become more attractive as an investment destination for UK investors after the India-UK Free Trade Agreement (FTA) comes into force.

Several provisions in the FTA, the finalisation of which was announced today, are investor-friendly -- including those on investment facilitation, intellectual property, digital trade, and dispute resolution. These steps are meant to offer long-term predictability to UK investors.

Britain is the sixth-largest investor in India. The country has received $35.3 billion in Foreign Direct Investment (FDI) from April 2000 and September 2024.

“It marks a significant milestone in the strategic partnership between the two nations. The agreement will enable India and the UK to jointly harness economic synergies, promote innovation, and create transformative economic opportunities”, Sanjiv Puri, President, Confederation of Indian Industry (CII), said.

The Federation of Indian Export Organisations (FIEO) also termed the FTA as a landmark step that will significantly boost bilateral trade, attract strategic investments, and further integrate Indian businesses into the global value chain.

“This agreement comes at a pivotal time, when India is positioning itself as a resilient and reliable trade partner in a rapidly evolving global landscape. The FTA reflects the shared economic vision of both countries and sets the stage for a mutually beneficial, sustainable, and forward-looking trade relationship”, S C Ralhan, president, FIEO said.

The India–UK FTA eliminates tariffs on a wide range of Indian goods. Key sectors poised to benefit include textiles and apparel, as the removal of tariffs will enhance India’s competitiveness against countries like Bangladesh and Vietnam. In the case of leather and footwear, this will provide increased access to high-end UK retail markets. Gems and Jewellery will get a boost because of increased export opportunities for India’s handcrafted and diamond processing units. While streamlining of regulatory processes under FTA will accelerate generic drug approvals, reduction in tariffs on agriculture and processed foods will provide better access for value-added Indian products, including tea, spices, rice, and ready-to-eat segments.

Services such as IT & professional services will benefit through mobility for professionals and reduced barriers for service exports.

The bilateral trade between India and the UK was $ 21.34 billion in 2023-24, higher than $ 20.36 billion in 2022-23.